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BlackRock Spot ETF Filing: Crypto Futures Are Over Two Years Old so Why is ETH Pumping Now? 

Last Updated November 10, 2023 2:03 PM
James Morales
Last Updated November 10, 2023 2:03 PM

Key Takeaways

  • BlackRock has filed to list a spot Ether ETF on the Nasdaq.
  • The price of ETH has climbed more than 10% on the news.
  • Ether futures funds were only approved by the SEC in October, 2 years after the first Bitcoin ETF.

The U.S. Securities and Exchange Commission (SEC) has yet to approve BlackRock’s application to list a Bitcoin spot Exchange-Traded Fund (ETF) on the Nasdaq stock exchange. Nevertheless, the world’s largest asset manager is already steaming ahead with plans for a second, Ethereum-based spot crypto fund, causing the price of ETH to jump 10% overnight.

Thursday, November 9, Nasdaq filing  suggests BlackRock is confident the SEC will approve its Bitcoin ETF application. But considering the history of US crypto funds, the firm might have jumped the gun.

First ETH Futures ETFs Launch 2 Years After BTC Peers

The prevailing optimism surrounding Bitcoin ETFs was initially motivated by a legal judgment that sided with Grayscale over the SEC. In that case, the court concluded that there were no grounds for the regulator to reject Grayscale’s ETF bid, given that it has previously allowed funds to invest in Bitcoin futures.

In fact, the Proshares Bitcoin Strategy ETF (BITO) debuted on the New York Stock Exchange in October 2021. Since then, equivalent offerings from VanEck, Valkyrie and others have also hit the market.

Despite allowing ETFs to hold Bitcoin futures since 2021, the SEC didn’t approve the first ETH futures funds until October this year. But why the holdup?

Different SEC Treatment For Bitcoin vs. Ether Funds

For VanEck and ProShares, the recently launched ETFs were approved more than 2 years after the fund managers first proposed the concept to the SEC. Both firms initially filed to list Ether futures funds back in August 2021, only to abruptly withdraw their applications two days later.

At the time, Bloomberg analyst Eric Balchunas speculated that the companies pulled their applications due to “Godfather-style” pressure from the SEC.

However, he noted that contemporary Bitcoin ETF applications remained in play as long as an equivalent retreat didn’t affect them.

In the end, Balchunas’ foresight proved correct, and Proshares’ BITO hit the market 2 months later. Favoritism perhaps? It’s hard to know for sure. Neither VanEck, ProShares nor any other fund manager would take another crack at listing ETH futures funds until this year, and since 2021, the SEC’s crypto policy has increasingly come under fire.

After accurately predicting the agency’s actions in 2021, Balchunas now believes the SEC will likely approve the first spot Bitcoin fund with a 90% probability by January 10. But for potential spot-based equivalents, past precedent doesn’t bode well.

Moreover, if the SEC drags out the process for another 2 years, Ether’s recent rally could just as easily reverse once the Blackrock effect loses its shine.

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