BlackRock Would Still Pursue Spot Ether ETF If Ethereum Cops Securities Designation

BlackRock’s CEO said the SEC classifying Ether as a security would not preclude spot Ethereum ETFs from entering the market.

By: Samuel Haig Loading...

BlackRock Would Still Pursue Spot Ether ETF If Ethereum Cops Securities Designation

BlackRock, the world’s largest asset manager, has reaffirmed its commitment to bringing a spot Ether ETF to market, regardless of whether the U.S. Securities and Exchange Commission classifies Ether as a security.

In a March 27 appearance on Fox Business, Larry Fink, the CEO of BlackRock, said Ether becoming classified as a security by the SEC would not be “deleterious” to its spot ETH exchange-traded fund (ETF) ambitions.

When asked if an Ether ETF would still be on the cards in the event of a securities designation for Ether, Fink said “I think so.”

BlackRock filed for a spot Ether ETF in November, two months before its iShares Bitcoin Trust (IBIT) was approved by the SEC. IBIT began trading in early January and has since absorbed $15.4 billion to rank as the third-largest commodity ETF behind the top two gold funds.

“IBIT is the fastest growing ETF in the history of ETFs, nothing has gained assets as fast as IBIT,” Fink told Fox Business. “I would never have predicted before we filed it, that we were going to see this type of retail demand.… I’m very bullish on the long-term viability of Bitcoin.”

Fink’s comments come as expectations that the SEC would approve the pending cohort of spot Ether ETF applications in late May have died down.

Eric Balchunas, an ETF analyst at Bloomberg who estimated the funds would receive approval at a 70% likelihood in January, has since revised his forecast to a “very pessimistic 25%.”

Balchunas cited the lack of engagement between the SEC and prospective Ether ETF issuers as the main reason for his skepticism, noting that the regulator conducted frequent meetings with spot Bitcoin ETF applicants in the months leading up to the funds’ approval in January.

“If SEC gave comments our odds would at least double, maybe even triple,” Balchunas tweeted. “But hard to imagine them leaving themselves and issuers less than 2 [months] for comments/fixes, etc.”

Brian Rudick, an analyst at GSR, a crypto trading firm, has also dropped his odds estimate from 75% to 20% since January, similarly citing a lack of interaction between applicants and the SEC.

However, Craig Salm, the chief legal officer of spot Bitcoin ETF issuer, Grayscale said the lack of SEC engagement should not be inferred as a bearish signal as its previous meetings with the agency ironed out the same issues that would apply to spot Ether ETFs.

“All of these issues were figured out and are identical when comparing spot Bitcoin to Ethereum ETFs,” Salm said. “The only difference is rather than the ETF holding bitcoin, it holds Ether… I don’t think perceived lack of engagement from regulators should be indicative of one outcome or another.”

However, many spot Ether ETF applicants have updated their filings to feature plans to stake a portion of their ETH should the funds be approved, marking a notable point of difference from their Bitcoin ETF applications.

On March 27, Fidelity filed its S-1 registration form for an Ethereum ETF, outlining plans to launch a staking program. Ark Invest and Franklin Templeton also submitted applications in February to include provisions on Ethereum staking.