The SEC in the United States has asked for public feedback regarding the latest modifications to BlackRock’s proposed Ethereum ETF, following Nasdaq’s resubmitted plan on April 19 to meet regulatory requirements.
An ETF named iShares Ethereum Trust by BlackRock is being developed to mirror Ethereum’s price movement, with the proposal submitted as early as November 2023.
An amendment significantly alters the original plan by shifting from a method of direct interactions with Ethereum to one involving cash transactions. Consequently, the SEC invites feedback from stakeholders and the public within 21 days on these proposed adjustments. Their input plays a crucial role in the regulatory assessment and likely impacts the final outcome.
Revised Structure of BlackRock’s Ethereum ETF
An early version of the iShares Ethereum Trust plan outlined a method for creating and redeeming shares that involved exchanging Ethereum directly. However, the updated submission makes it clear that these steps will now be handled through cash transactions. This model, referred to as a “cash redemption model,” aligns with how approved Bitcoin SPOT ETFs operate in terms of cash transactions.
Switching to handling transactions in cash is considered a shift toward being penalized for financial exchanges over physical ones by regulators.
BlackRock’s new proposal lacks a staking mechanism, unlike Fidelity and Grayscale who have included this feature in their updated ETF applications. This change could be seen as a cautious approach from BlackRock, potentially to streamline the approval process by keeping a close eye on regulatory trends.
Market Response and Analyst Perspectives
The outlook for Ethereum ETFs in the American cryptocurrency market remains uncertain, with major financial institutions repeatedly submitting applications for approval. Yet, recent signs point towards growing skepticism among market analysts regarding the imminent green light for these ETFs.
Now, Eric Balchunas, an ETF analyst at Bloomberg, has reduced his estimation of the likelihood that these ETFs will be approved by May from approximately 70% to just 25%.
Currently, Standard Chartered has revised its optimistic view regarding the approval of Ethereum ETFs by the SEC in May. Given the lack of public progress in discussions between the SEC and ETF applicants, this change in perspective suggests that the chances are now slim. Previously, such dialogue had preceded the approval of Bitcoin ETFs.
The SEC’s postponement of decisions on proposed ETFs from Franklin Templeton and Grayscale, which are linked to cryptocurrencies, indicates cautious regulation of such financial products in this area. This prolonged decision-making process allows the SEC to consider public comments carefully, which will play a crucial role in shaping the regulatory landscape for Ethereum and other crypto ETFs.
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2024-04-24 01:41