The world’s largest asset manager, Blackrock, has outlined why the U.S. Securities and Exchange Commission (SEC) “must” approve spot Ethereum exchange-traded funds (ETFs). Nasdaq, which has filed with the SEC to list and trade shares of Blackrock’s spot ether ETF, believes that approval of a spot ETH ETF would be “a major win for the protection of U.S. investors” in the crypto space.
Blackrock Argues SEC ‘Must’ Approve Spot Ether ETF
Blackrock, the world’s largest asset manager, has argued that the U.S. Securities and Exchange Commission (SEC) must approve spot ether exchange-traded funds (ETFs) like the one it seeks to launch. Nasdaq Stock Market filed with the SEC to list and trade shares of Blackrock’s spot ether ETF called “Ishares Ethereum Trust” last week after the asset manager registered the fund with Delaware’s Division of Corporations.
In its SEC filing, Nasdaq Stock Market LLC detailed that the sponsor of Blackrock’s spot ether ETF is Ishares Delaware Trust Sponsor LLC, an indirect, wholly owned subsidiary of Blackrock Inc. In addition, Coinbase Custody Trust Company is the custodian for the Trust’s ether holdings.
“To this point, the lack of an ETP [exchange-traded product] that holds spot ETH exposes U.S. investor assets to significant risk because investors that would otherwise seek cryptoasset exposure through a spot ETH ETP are forced to find alternative exposure through generally riskier means,” Nasdaq described, emphasizing:
Approval of a spot ETH ETP would represent a major win for the protection of U.S. investors in the cryptoasset space.
”In summary, both the exchange and the sponsor believe that this proposal and the
included analysis are sufficient to establish that the CME ETH Futures market represents a regulated market of significant size as it relates both to the CME ETH Futures market and to the spot ETH market and that this proposal should be approved,” the filing reads.
Nasdaq also noted that the sponsor believes the differences between the Investment Company Act of 1940 and the Securities Act of 1933, and the surveillance-sharing available for the CME ETH futures market and the spot ETH market, “are not meaningful in the context of ETH-based ETF and ETP proposals.”
In the recent case of Grayscale Investments v. SEC, the court found that the securities regulator had failed to explain why it approved bitcoin futures ETPs but disapproved Grayscale’s proposal to convert its bitcoin trust (GBTC) to a spot bitcoin ETF. The court subsequently vacated the SEC’s disapproval order.
Nasdaq noted that on Oct. 2, the SEC approved nine ETH futures ETFs for trading. “Given that the Commission has approved ETFs that offer exposure to ETH futures, which themselves are priced based on the underlying spot ETH market, the sponsor believes that the Commission must also approve ETPs that offer exposure to spot ETH, like the Trust,” the exchange stated, concluding:
Blackrock also has an application with the SEC for a spot bitcoin ETF. In October, CEO Larry Fink said there is strong demand and pent-up interest in crypto. He previously said that crypto will “transcend any one currency,” and that Blackrock seeks to democratize crypto. Fink also sees BTC as a hedge against inflation and currency devaluation.
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