On the evening of November 16th, the cryptocurrency community was abuzz with news that the financial giant Wall Street, BlackRock, had submitted an application to the U.S. Securities and Exchange Commission (SEC) to establish an Ethereum ETF Spot fund.
According to the registration, BlackRock has submitted an S-1 application to establish an Ethereum ETF Spot fund called “iShares Ethereum Trust” with the purpose of “reflecting the general price performance of ETH.” Similar to the Bitcoin ETF Spot, Coinbase Custody Trust Company is designated as the custodian for this Ethereum ETF fund. Besides Coinbase, another custodian will hold cash.
Regarding the fund’s structure, the ETF will be structured as a trust fund sponsored by BlackRock and will represent Ethereum holdings on behalf of investors.
Additionally, BlackRock has outlined some benefits of investing in the ETF compared to holding Ethereum directly, such as avoiding the complexity of digital wallets and asset custody, convenience of trading through traditional brokerage accounts, and the ability to create and redeem ETF shares continuously.
According to the prospectus, the Net Asset Value (NAV) of the ETF will be calculated daily using the Ether-Dollar CME CF Reference Rate, which is published by CF Benchmarks. This standard index aggregates trading activities on major Ethereum exchanges over a period of 3-4 hours (ET) to create a reference rate for Ethereum.
The document also discusses how the ETF will handle network forks, airdrops, and other events that may introduce new assets. The fund’s sponsor has the sole discretion to decide whether to seek compensation or abandon such assets. Any abandoned assets will not be reflected in the ETF’s Net Asset Value.
In terms of fees, BlackRock has stated that the ETF will have management fees, but the exact amount has not been disclosed. The trustee will periodically sell Ethereum to cover fees, creating taxable events for shareholders.
Upon listing, BlackRock plans to list the ETF on Nasdaq under an undisclosed ticker symbol and will continuously issue shares to authorized participants in exchange for Ethereum deposits.
In summary, the disclosure provides an in-depth look at the structure and mechanism of the proposed Ethereum ETF by BlackRock. As a major financial company, BlackRock’s Ethereum ETF could have a significant impact on adoption and trading volumes if approved by the SEC. However, the legal environment remains uncertain, with some Bitcoin ETF applications still awaiting approval.
Following this news, the price of ETH initially reacted positively, rising by 3% from $2,069 to $2,090 within a short period, before quickly retracing to its initial value. At the time of writing, ETH is trading around $1,985.