The U.S. Securities and Exchange Commission (SEC) has once again hit the snooze button on BlackRock’s proposed Ethereum exchange-traded funds (ETFs). This marks the second postponement, hinting at a meticulous scrutiny of legal and policy nuances surrounding the iShares Ethereum Trust.
Here’s some more information on this interesting issue.
BlackRock submitted the application for the iShares Ethereum Trust on November 21, 2023, aiming to list and trade shares under Nasdaq Rule 5711(d), governing Commodity-Based Trust Shares. Initially expected by January 24, 2024, the SEC’s decision date has been extended for the second time.
The cause? A deep dive into the legal and policy considerations that demand a more thorough analysis.
The SEC, invoking Section 19(b)(2)(B) of the Act, is delving into the proposed rule change with meticulous care. The focus is on aligning with Section 6(b)(5) of the Securities Act, emphasizing the prevention of fraudulent practices, investor protection, and the public interest.
“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest.”
Sherry R. Haywood, SEC Assistant Secretary
The proposed Ethereum Trust seeks to mirror Ether’s price performance, primarily holding Ether as assets with a custodian. The daily valuation process involves assessing Ether based on the CF Benchmarks Index. The filing notes,
“On each Business Day, as soon as practicable after 4:00 p.m. Eastern Time (“ET”), the administrator of the Trust will evaluate the ether held by the Trust as reflected by the CF Benchmarks Index and determine the net asset value of the Trust. … The Trust will issue and redeem baskets of Shares on a continuous basis only in exchange for an amount of ether determined by the trustee of the Trust.”
Senior Bloomberg analyst Eric Balchunas offers an intriguing viewpoint, stating,
“No offence to the ETH people but this is such small potatoes vs spot bitcoin ETFs. It’s like the opening act coming on after the headliner.”
Balchunas suggests that Ethereum ETFs might not attract the same attention as their Bitcoin counterparts, drawing an analogy between them and GenX bands in a concert lineup.
As the SEC meticulously reviews BlackRock’s Ethereum ETF proposal, market participants are on high alert, gauging potential implications on investor sentiment and market dynamics. If approved, Ethereum ETFs could unlock new avenues for investors seeking exposure to the cryptocurrency market without directly holding the digital asset.
Also Read: The Countdown to Crypto’s Biggest Events: Halving and the Ethereum ETF
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