BlackRock wants to create an ETF that holds Ethereum's ether (ETH), a plan that deepens the world's largest asset manager's commitment to cryptocurrencies.
Following the news, ETH's price surged to its highest level of the day near $2,100, up about 3% versus just before the filing came out. It later gave back about half that gain, though it remains up about 9% versus 24 hours earlier.
The company's plan was revealed in a filing by Nasdaq, the U.S. exchange where BlackRock will seek to list the product – which will need regulatory approval. Earlier Thursday, it emerged that the corporate entity "iShares Ethereum Trust" had been registered in the state of Delaware; iShares is the name of BlackRock's ETF division.
BlackRock has already made waves in crypto by seeking to list a bitcoin ETF, the sort of easy-to-trade product that could dramatically broaden access to crypto to average investors. CEO Larry Fink has become a vocal supporter of crypto, reversing his previous skepticism.
According to the filing, U.S.-based crypto exchange Coinbase would be the custodian for the ether held by the product, while an unnamed third party would hold its cash.
BlackRock also has a market-surveillance pact with Coinbase; such surveillance-sharing agreements appear to be key to getting such ETFs approved by the U.S. Securities and Exchange Commission.
The filing appeared to try and preempt possible SEC objections to the surveillance-sharing aspect, saying Blackrock believes the prices for CME Group's ether futures (and there are already ETFs that hold those) closely match spot ETH prices.
"Either CME surveillance can detect spot-market fraud that affects both futures ETFs and spot exchange-traded products, or that surveillance cannot do so for either type of product," the filing said. "Having approved ETH futures ETFs in part on the basis of such surveillance, the Commission has clearly determined that CME surveillance can detect spot-market fraud that would affect spot ETPs, and the Sponsor thus believes that it must also approve spot ETH ETPs on that basis."
Source : CoinDesk / November 10, 2023