The proposed iShares Ethereum Trust, registered last week, is slated to be listed on Nasdaq if approved. The ETF aims to provide investors with exposure to ether, the second most popular cryptocurrency, without requiring direct ownership.
BlackRock's approach involves converting the trust into a "spot" ETF, signifying ownership of ether rather than futures products linked to the crypto token.
While the U.S. Securities and Exchange Commission (SEC) has historically favored futures-based crypto ETFs, citing concerns about fraud and manipulation in the spot crypto market, a notable development occurred in August. A federal appeals court ruled against the SEC's rejection of Grayscale Investments' application for a spot bitcoin ETF, marking a significant win for the digital asset manager.
Grayscale's success has spurred increased interest among companies filing for spot-based investment vehicles, instilling renewed confidence in the crypto industry after facing challenges last year. BlackRock initially ventured into the crypto domain with a filing for a spot bitcoin ETF in June. This recent filing indicates the firm's intent to extend its reach beyond bitcoin, positioning itself in the evolving landscape of cryptocurrencies.
BlackRock now faces competition from both crypto-native entities like Grayscale and Valkyrie and traditional financial powerhouses such as Invesco. Coinbase Custody, a unit of crypto exchange Coinbase, is set to hold the proposed ETF's ether in custody, continuing its collaboration as the proposed custodian for BlackRock's bitcoin ETF.
As reported by Reuters, BlackRock's latest move to woo investors into the Ethereum Trust showcases the company's strategic response to the shifting dynamics of the crypto market. This development opens new opportunities and challenges for established players and newcomers alike.
Source : Blockster / Nov 20, 2023