SEC asks for comments on BlackRock's amended spot Ethereum ETF proposal

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Quick Take

In January, the SEC delayed deciding on BlackRock’s spot Ethereum ETF and later on April 19, Nasdaq filed an amendment to the proposal.
In the amended filing, the exchange discussed the ETF’s creation and redemption process.

The U.S. Securities and Exchange Commission is asking for public comments on changes made to BlackRock's proposed spot Ethereum exchange-traded fund.

The world's largest asset manager is vying along with others for a spot Ethereum ETF, though optimism that one could get the SEC's greenlight in the next month has diminished. BlackRock filed for its spot Ethereum ETF in November 2023, naming it the iShares Ethereum Trust, and said it seeks to "reflect generally the performance of the price of ether."

In January, the SEC delayed making a decision on BlackRock's spot Ethereum ETF and on April 19, Nasdaq filed an amendment to the proposal.

"The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons," the SEC said in a filing on Tuesday.

Comments will be posted on the SEC's website and are due in 21 days, the agency said.

The details

In the amended filing, the exchange discussed the ETF's creation and redemption process, and said, "baskets are only issued or redeemed in exchange for an amount of cash determined by the Trustee on each day that Nasdaq is open for regular trading." This differs from the original filing from November, which says the process would involve ether.

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The process of having a so-called cash redemption model versus an in-kind model was heavily scrutinized when issuers met with the SEC last year on spot bitcoin ETFs. Those products later got the agency's approval in January.

Staking is not mentioned in BlackRock's latest amendment. Other firms, such as Fidelity and Grayscale, changed their spot Ethereum application to include provisions for staking. Grayscale also proposed a creation and redemption process involving cash.

Big-name firms, including Fidelity and BlackRock, have applied for a spot ether ETF over the last few months. Optimism for the SEC approving such a product has steadily fallen. For example, Bloomberg ETF analyst Eric Balchunas lowered his estimate of the chances of a spot Ethereum ETF approval by May from about 70% to 25%.

Earlier Tuesday, the agency pushed back its timeline on making decisions for other proposals from Franklin Templeton and Grayscale to June.

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About Author

Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.