SEC Requests Comments on BlackRock Ethereum Spot ETF
The SEC is seeking public comments on BlackRock’s Ethereum spot ETF. The new proposal moves from an ether-based exchange model to a cash-based one. Skepticism persists about the chances of approval of cryptocurrency ETFs.
The US Securities and Exchange Commission (SEC) has opened the public comment period on recent modifications to BlackRock’s proposed Ethereum spot exchange-traded fund (ETF).
This request comes after Nasdaq submitted an updated proposal on April 19, refining previous submissions to better align with regulatory expectations.
BlackRock Ethereum Spot ETF Under Analysis
Called the iShares Ethereum Trust, the BlackRock ETF aims to accurately reflect the price of Ethereum. Initially presented in November 2023, the ETF proposal has undergone modifications to its structure, particularly with regard to its creation and redemption processes.
Unlike its original version, which involved direct exchanges with Ethereum, the revised proposal suggests a cash-based transaction model. This shift to a cash-back strategy reflects a cautious regulatory approach, reminiscent of debates around spot Bitcoin ETFs last year.
Those models, which later received approval in January, similarly favored cash transactions over in-kind exchanges, possibly setting a precedent for Ethereum ETFs.
The SEC’s request for input signals a critical review phase, which will allow interested parties. Furthermore, the public influence the final decision. Responses to the proposal must be submitted within 21 days of the announcement, as indicated on the SEC’s official website.
The overall outlook for cryptocurrency ETFs remains uncertain. Notable entities like Fidelity and Grayscale have also overhauled their Ethereum ETF applications, integrating staking provisions and cash-based models.
Chances of Approval of Ethereum Spot ETFs Decrease
Despite these efforts, market analysts remain skeptical. Bloomberg’s Eric Balchunas recently downgraded the likelihood of Ethereum ETFs gaining approval before May:
“We keep the line at 25% probability, although, to be honest, it is a very pessimistic 25%. The lack of commitment appears to be intentional in the face of procrastination. There are no positive signs or information anywhere. Personally, I hope they approve it, but it doesn’t look good.”
As the deadline for other cryptocurrency-related decisions approaches. Including those regarding the Franklin Templeton and Grayscale proposals, the SEC appears to be taking a methodical approach. With this, emphasizing regulatory scrutiny and the participation of interested parties in their decision-making processes.
Grayscale Going Through Identical Fate
The SEC released notices of the delay in Grayscale’s decision and the amendment to BlackRock’s application just hours after the agency postponed its decision on the Franklin Templeton Spot ETH ETF.
The SEC’s decision on converting the Grayscale Ethereum Trust into a spot ETH exchange-traded product on NYSE Arca was scheduled for April 24, but will now be extended another 60 days to June 23.
“The Commission finds it appropriate to designate a longer period to issue an order approving or rejecting the proposed rule change so that it has sufficient time to consider the proposed rule change, as modified by Amendment No. 1,” the agency wrote in its notice. on April 23.
The SEC is expected to make a decision on Franklin Templeton’s application by June 11.
Also on April 23, Grayscale filed a Form S-3, similar to the S-1 but shorter, for a Grayscale Ethereum Trust and an S-1 for a Grayscale Ethereum Mini Trust.
Observers claim that the SEC is not committed to ETH spot ETF applications, which many interpret as a sign of a possible imminent rejection.
Grayscale scored a victory over the SEC in August when an appeals court partially overturned the SEC’s rejection of its application to convert its over-the-counter Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF listed.
By Leonardo Perez