In a move that could significantly impact the world of cryptocurrency, BlackRock (NYSE:BLK) has filed for a spot Ether (ETH) ETF, named "iShares Ethereum Trust," which resulted in Ether's price crossing the $2,000 mark. This development, confirmed on November 9, has not only injected optimism into the crypto markets but also reignited discussions around the U.S. Securities and Exchange Commission's (SEC) regulatory approach to cryptocurrency-based exchange-traded funds (ETFs).
The SEC has historically approved numerous crypto futures ETFs while consistently denying applications for spot-crypto ETFs. The regulator's rationale hinges on the perceived superior regulation and consumer protections under the 1940 Act compared to those provided by the 1933 Act, which governs spot-crypto ETFs. BlackRock's recent application challenges this position by arguing that these protections apply to ETFs and their sponsors rather than to the underlying assets such as spot ETH or ETH futures derived from them.
Legal experts and analysts are closely watching BlackRock's push against the SEC's stance. Jake Chervinsky referenced Grayscale's DC Circuit victory as a precedent for ETH-based ETP proposals, emphasizing the importance of the spot ETH market. Scott Johnsson pointed out the need to understand the differences between the '40 Act and '33 Act in this context, as well as the significant markets test analysis included in BlackRock's 19b-4 filing.
The anticipation of regulatory approval for a spot Bitcoin ETF is also high, with market sentiment buoyed by a 40% increase in Bitcoin value today. Industry leaders like ETC Group CEO Tim Bevan have marked January as a key month for potential SEC decisions due to ongoing investigations.
Should BlackRock succeed in its endeavor, it would represent a landmark shift in how spot-crypto ETFs are perceived and regulated. The registration of iShares Ethereum Trust in Delaware and speculative comments about an imminent Bitcoin ETF suggest that institutional interest in cryptocurrencies is growing. This could pave the way for broader adoption within traditional finance, offering traders potential real yields on staked spot ETH ETFs as highlighted by independent Ethereum educator Sassal.
The diverse reactions within the crypto community reflect the complexity and evolving nature of cryptocurrency regulation. While skeptics like Udi Wertheimer remain cautious, others like Raoul Pal view these developments as milestones for asset managers. As investors and regulators alike navigate this new terrain, all eyes will be on the SEC's response to BlackRock's challenge and its implications for future cryptocurrency investment products.
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