BlackRock Ether ETF Application Official
[TL; DR]
BlackRock has filed a spot Ether ETF with the United States Securities and Exchange Commission.
The SEC has not made public its decisions on BlackRock’s Ether and Bitcoin ETF applications.
Several big trading companies, including Virtu Financial, Jump Trading and Jane Street, have promised to invest in BLK crypto ETFs.
Introduction
The involvement of BlackRock, the world number one asset manager, in cryptocurrency has generated much interest in the sector. The company has already filed for two crypto ETFs, ETH ETF and BTC ETF, with the US Securities and Exchange Commission (SEC). However, the SEC has not approved any of these two crypto exchange traded funds.
Today, we will discuss BlackRock’s progress towards launching crypto ETFs as well as SEC’s response to BlackRock’s two applications.
BlackRock Filed an S-1 Form with SEC
On 15 November BlackRock filed an S-1 Form with the United States Securities and Exchanges Commission (SEC) for a spot Ether (ETH) exchange traded fund (ETF). This filing came a few days after the asset management firm registered the name of the new offering, iShares Ethereum Trust, with NASDAQ.
Following BlackRock’s filing for the Ethereum ETF the ETH price spiked by 2% to $2,080. That was a sign that the crypto market appreciated the new spot crypto ETF filing. Recently, the court ruling that the SEC should review Grayscale’s BTC ETF led to another Ethereum price rise.
BlackRock Awaits SEC Decision on Bitcoin ETF
BlackRock’s ETH ETF filing comes several months after it submitted its spot BTC ETF application to the SEC. As such, it is waiting for the regulatory authority’s decision on its applications. With these fillings, BlackRock has shown its willingness to expand its crypto related products.
Specifically, BlackRock filed its Bitcoin ETF application in June with the focus of creating an opportunity for both institutional and retail investors to invest in bitcoin. For its BTC ETF the company intends to use CME CF Bitcoin Reference Rate to track the value of bitcoin. This metric is based on the value of bitcoin from a selected cryptocurrency exchange.
Meanwhile, BlackRock is waiting for the SEC’s decision on its crypto ETFs including the bitcoin one. As of now, the SEC has not approved a single spot crypto ETF although there are more than 10 applications which different firms have submitted for assessment and approval. Several companies, including Grayscale, VanEck, and WisdomTree, have filed applications for BTC spot ETFs.
The SEC’s approval of spot crypto ETFs will be a big boost for the cryptocurrency sector since it is likely to attract much investment into the sector. That will also indicate that bitcoin has become part of the mainstream asset class.
In the meantime, analysts like Mike Belshe, the CEO of BitGo, a cryptocurrency exchange, believe that there are clear indications that the SEC will approve several spot bitcoin ETFs. During an interview with Bloomberg, Belshe pointed out that the SEC is likely to approve crypto ETFs soon. However, he contends that the applicants should improve the market structure.
He said, “I think it is quite likely we have another round of ETF rejections before we get the positive news.”
Additionally, Belshe emphasized the need for the firms to come up with a clear position on separating cryptocurrency exchanges from the custodians.
SEC’s Guidance Fuels Hope
The Securities and Exchange Commission’s (SEC) recent guidance to exchanges about crypto ETFs has created much hope in the cryptocurrency market that it may approve the applications in 2024.
Eric Balchunas, a Bloomberg ETF analyst, posted on X that the SEC has given exchanges valuable advice on crypto ETFs. According to Balchunas, the SE advised exchanges to use the cash creation method rather than the in-kind method for the spot crypto ETFs.
In addition, the SEC advised the exchanges to file amendments that show compliance to the above. It is important to note that exchanges can choose between in-kind or in cash when creating ETF units.
With In cash creation, participants will provide cash to the ETF issuer to acquire units of ETFs. On the other hand, the in-kind method will require the investors to use cryptocurrency. This will involve providing bitcoin for spot bitcoin ETFs.
Institutional Investors Ready to Pour their Funds in BLK Bitcoin ETFs
BlackRock’s filing for both ETH ETF and bitcoin ETF has created much confidence in the market and has overshadowed the effects of the SEC’s crackdown on crypto activities in the first half of the year. For example, the SEC sued several crypto firms including Binance and Coinbase.
Such a crackdown depressed prices of major cryptocurrencies such as bitcoin. Nonetheless, BlackRock’s engagement with the SEC over its bitcoin ETF has resulted in short-term BTC bullish outlook.
As per a recent report, several big trading platforms that include Virtu Financial, Jump Trading and Jane Street are willing to provide liquidity to the BlackRock spot bitcoin ETF if approved. The approval of at least one spot BTC ETF is likely to force the Bitcoin price up.
Conclusion
It is now official that BlackRock has filed for a spot ETH ETF with the SEC. What this means is that the company (BLK) is waiting for the SEC’s final decision on its Ether and Bitcoin ETFs. In the meantime, the SEC has not given any hint whether it will approve or disapprove these crypto ETFs.
