Asset management giant BlackRock made waves this week by filing for regulatory approval of a spot Ethereum exchange-traded fund (ETF). The proposed ETF, titled iShares Ethereum Trust, aims to give investors direct exposure to ether, the native cryptocurrency of the Ethereum blockchain.
Keypoints
- BlackRock has filed for a spot Ethereum ETF with the SEC, seeking to provide direct exposure to ether. This comes after it filed for a spot bitcoin ETF in June.
- The Ethereum ETF will be called the iShares Ethereum Trust and listed on Nasdaq if approved. The bitcoin ETF is called iShares Bitcoin Trust.
- Coinbase Custody will hold the Ethereum ETF's ether, similar to BlackRock's proposed bitcoin ETF.
- BlackRock joining the crypto ETF race shows growing institutional interest in direct cryptocurrency exposure.
- The crypto industry hopes BlackRock's Ethereum ETF filing could improve chances of regulatory approval after a court ruled the SEC was wrong to reject a spot bitcoin ETF.
The filing with the Securities and Exchange Commission (SEC) comes just months after BlackRock sought approval for a spot bitcoin ETF called iShares Bitcoin Trust. Both filings represent a major bet on crypto by the world's largest asset manager.
BlackRock's push into crypto ETFs signals growing confidence that the SEC will finally approve such products. The regulator has long rejected spot crypto ETFs over concerns about potential fraud and manipulation, instead approving only futures-based products.
But a landmark federal court ruling in August said the SEC was wrong to reject a spot bitcoin ETF proposed by Grayscale Investments. The decision gave the industry renewed optimism that physical crypto ETFs would soon get the green light.
Now all eyes are on how regulators respond to BlackRock's filings. Approval would allow mainstream investors easy access to crypto returns without direct custody challenges. It would also boost confidence in the maturing crypto asset class.
BlackRock has selected Coinbase Custody to hold the proposed Ethereum ETF's ether reserves. Coinbase will also custodian the bitcoin if BlackRock's bitcoin ETF is approved. The ETFs will use CF Benchmarks' reference rates as benchmarks.
The filings pit BlackRock against rivals like Grayscale, Valkyrie and Invesco in the race for first-mover advantage in crypto ETFs. While Grayscale and others focus solely on digital assets, BlackRock's size and influence could make it a formidable competitor.
The moves expand BlackRock's growing crypto footprint. The firm began trading bitcoin futures last year and recently invested in Coinbase. CEO Larry Fink says BlackRock is studying digital currencies and the metaverse.
With over $8 trillion in assets under management, BlackRock can singlehandedly drive mainstream adoption. Its backing of crypto ETFs gives individual investors a safer route to gain exposure without direct ownership. For a cautious Wall Street firm, it's an incremental but important step into the world of digital assets.
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