BlackRock, the world’s largest asset manager, has made a significant move in the cryptocurrency market by officially filing for a spot Ether exchange-traded fund (ETF) with the United States Securities and Exchange Commission (SEC). This filing, which took place on Nov. 15, marks BlackRock’s foray into the world of Ethereum-based ETFs and demonstrates the growing interest of institutional investors in the crypto market.
The Ether ETF, called the iShares Ethereum Trust, is designed to “reflect generally the performance of the price of Ether,” as stated in the S-1 filing submitted to the SEC. BlackRock’s iShares brand is well-known in the world of ETF products, with its Bitcoin ETF known as the iShares Bitcoin Trust. Coinbase has been appointed as the custodian for the underlying ETH within the trust.
This move by BlackRock comes just a week after the registration of the iShares Ethereum Trust with Delaware’s Division of Corporations, and nearly six months after BlackRock filed its spot Bitcoin ETF application. This swift action by BlackRock underscores the increasing momentum and interest in crypto-based ETFs among institutional investors.
Filing for a spot ETF involves a two-step process, requiring SEC approval from both the Trading and Markets division on the 19b-4 filing and the Corporate Finance division on the S-1 filing or prospectus. The intricate nature of this process highlights the regulatory hurdles that firms must navigate when entering the world of cryptocurrency ETFs.
The rush for spot Ethereum ETFs began in early November when the SEC acknowledged Grayscale Investment’s application to convert its Ethereum trust into an ETF. This event set off a chain reaction, with institutional giants lining up to capitalize on the growing demand for crypto-based ETFs.
However, it’s important to note that many institutional giants filed for crypto spot ETFs during the last bull cycle, only to face rejection from the SEC. At the time, the SEC cited the relatively small size of the crypto market as a barrier to approval. Nevertheless, this recent wave of filings indicates a renewed optimism and confidence among institutional players that the regulatory landscape may be shifting in favor of crypto-based ETFs.
In fact, market pundits and ETF analysts have predicted that the chances of approval for a spot Bitcoin ETF by early 2024 are as high as 90%. Meanwhile, approval for the spot ETH ETF might come shortly after, signaling a potentially significant shift in the SEC’s stance on crypto-based ETFs.
The institutional rush into cryptocurrency-based spot ETFs comes at a time when the crypto market is in a recovery phase, having regained a significant portion of the ground lost during the last bear market. This recovery, coupled with the growing interest from institutional investors, has contributed to a sense of cautious optimism within the market.
Overall, BlackRock’s filing for a spot Ether ETF, along with the broader trend of institutional interest in crypto-based ETFs, signals a potentially transformative moment for the cryptocurrency market. As regulatory barriers are navigated and market dynamics continue to evolve, the landscape for cryptocurrency-based investment products is likely to undergo significant changes in the coming months and years. This growing institutional interest in cryptocurrency-based investment products may ultimately pave the way for broader adoption and integration of cryptocurrencies within traditional finance.
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