BlackRock, the world’s biggest asset manager, has made its first strides to create an Ethereum ETF, stirring a massive buzz around the cryptocurrency.
Consequently, the price of ETH took an upward trajectory, adding 7% on Thursday and exceeding $2,000 – its highest gain since April, just before the filing was released.
The company’s ether ETF intention was disclosed in a filing by Nasdaq – which is the exchange where BlackRock intends to list the product, should it pass the regulatory approval.
It was gathered earlier on Thursday that BlackRock had registered the iShares Ethereum Trust as a statutory trust in the state of Delaware. Nasdaq also filed a proposal on that same day to list and trade the trust’s shares.
Bitcoin, the largest cryptocurrency, wasn’t left behind as it went up 2.56%, hitting $36,553, thus floating around an 18-month high. The rise in the price of bitcoin could be attributed to the frequency at which asset managers began filing for ETF launches this summer.
Earlier in June this year, BlackRock made the headlines for registering a similar bitcoin trust – and in a week, filing an application with the SEC to launch a spot bitcoin ETF.
The Security and Exchange Commission, under Chair Gary Gensler, has still not approved any bitcoin ETF. The commission has been on a long-term opposition to any such fund, aside from some futures contract-backed ETFs.
The SEC’s rejection of the spot ETFs has seen it block Grayscale’s application to convert its Bitcoin Trust to a spot ETF. One of the reasons for this objection was that the spot BTC market is susceptible to manipulation and fraud; although the SEC’s decision was later overruled by the D.C. Circuit Court of Appeals back in August.
If the SEC eventually allows bitcoin ETFs to run, then ether funds should most likely follow suit since ether is the largest cryptocurrency after bitcoin.
As per BlackRock’s filing for an ether ETF, Coinbase – a US-based crypto exchange – will have custody of the ether held by the product, while an unidentified third party will hold the cash.
“The assets of the Trust consist primarily of ether held by a custodian on behalf of the Trust. Coinbase Custody Trust Company, LLC (the “Ether Custodian”), is the custodian for the Trust’s ether holdings; and another entity will be the custodian for the Trust’s cash holdings (the “Cash Custodian” and together with the Ether Custodian, the “Custodians”) and the administrator of the Trust (the “Trust Administrator”),” said the filing.
In addition, BlackRock has secured a market-surveillance agreement with Coinbase, which should play a pivotal role in having such ETFs approved by the US Security Exchange Commission.
There are currently about a dozen ETF providers filing to create spot bitcoin ETFs or convert their current products to spot ETFs in order to contribute towards the recent buzz around the cryptocurrency.
Some other ETF providers that have filed for spot bitcoin ETFs have also applied for SEC approval for spot ether funds, including Invesco, VanEck, Ark Investment Management, Gray-scale, and Hashdex.