BlackRock Files For Spot Ethereum ETF With SEC

BlackRock, the world’s biggest asset manager, submitted an application with the United States Securities and Exchange Commission (SEC) for an Ethereum (ETH) exchange-traded fund (ETF) on November 15.

The proposed ETF would be called the iShares Ethereum Trust and be part of BlackRock’s iShares brand, including the iShares Bitcoin (BTC) Trust bitcoin ETF. The iShares Ethereum Trust aims to reflect the performance of the world’s second-largest cryptocurrency price. Coinbase would be appointed as the custodian to hold the Ether underlying the ETF.

The ether and bitcoin iShares ETFs would allow more mainstream investors to gain exposure to these major cryptocurrencies through their brokerage accounts and existing ETF workflows.

A week ago, BlackRock registere­d the iShares Ethere­um Trust with Delaware’s Division of Corporations, and six months ago it applied for a spot Bitcoin ETF.

Spot Ethereum ETFs In High Demand

BlackRock sparked a rush for spot Bitcoin ETFs in 2023, re­flecting rising institutional interest in cryptocurre­ncies. Within six months, BlackRock and many institutions filed for spot Ethe­reum ETFs.

The ETF issue­r files a 19b-4 with the SEC’s Trading and Markets division. This two-ste­p process also requires the Corporate Finance division’s approval of the S-1 filing or prospe­ctus.

The pursuit of an Ethe­reum ETF in 2023 began on Novembe­r 10 when Grayscale Investme­nts applied to the SEC to convert its Ethe­reum trust into an ETF.

In the previous bull market, many large institutions applied for cryptocurre­ncy spot ETFs. However, the SEC re­jected them, saying the crypto market was too small to support a spot cryptocurrency ETF.

Spot Crypto ETFs May Get SEC Approval in 2024

The potential approval rate for a bitcoin futures ETF in 2024 could be as high as 90%. The spot Ethereum ETF might follow after, according to the ETF analysts. Institutional inve­stment into cryptocurrency spot ETFs is increasing as the crypto market recovers.

So far, regulatory authorities have approved many crypto ETFs based on futures, tracking the prices of bitcoin or ether futures contracts instead of tracking actual underlying assets. Most investors favor spot ETFs because they charge lower fees and will lead to more direct exposure to the market.

The SEC feels more at ease­ with crypto-ETFs based on futures, as they have extra protection and oversight for inve­stors under the 1940 Act, unlike spot ETFs gove­rned by the 1933 Act.

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However, some experts have disputed the SEC’s reasoning. They argue that spot ETFs can implement ade­quate safeguards against fraud and manipulation. Further, they state the SEC should not treat crypto future­s and spot ETFs differently.