Asset management firm Blackrock recently categorically denied rumors regarding the launch of an exchange-traded fund (ETF) linked to XRP.
The fake news of such a prospect temporarily pushed up the value of XRP by more than 10%, but the token subsequently pulled back those gains. See below for all the details.
BlackRock has no plans for an ETF tied to XRP: all the details
As anticipated, Blackrock recently debunked news of its alleged attempt to launch an exchange-traded fund (ETF) tied to XRP, stating that it is not pursuing such an initiative, as announced by the asset manager on Monday.
Specifically, a spokesperson clarified that a regulatory document misinterpreted as a step toward the XRP ETF is false, debunking rumors circulating on social media.
Moreover, despite XRP’s initial rise in value by more than 10%, the cryptocurrency has since corrected its intraday price, returning to around 65 cents.
Blackrock, which is known for filing applications with the US Securities and Exchange Commission (SEC) for Bitcoin and Ether ETFs, had previously submitted documents regarding a Delaware entity as a corporate vehicle.
However, the documents filed Monday, which mimicked the structure of such applications, were not actually submitted by the asset management giant.
Unfortunately, the abuse of Delaware’s corporate registration process is nothing new.
In fact, in 2021, similar documents suggested that Grayscale, a subsidiary of Digital Currency Group (CoinDesk’s parent company), would launch trust vehicles for two tokens, news later denied.
Similarly, on Monday, some ETF observers helped spread the false deposit, while some media companies helped amplify it, generating buying pressure on XRP.
However, other informed observers raised doubts about the plausibility of Blackrock, which is considered conservative in the cryptocurrency sector, considering the creation of an ETF for XRP, especially considering the ongoing dispute with the SEC.
Moreover, it has been noted that unlike Bitcoin and Ether, XRP does not enjoy a large regulated futures market in the United States.
BlackRock challenges SEC on crypto ETFs: why the distinction between futures and spot market is arbitrary
As we know, BlackRock is currently facing the US Securities and Exchange Commission (SEC).
Specifically, the company argues that Exchange Traded Funds (ETFs) based on the Bitcoin (BTC) and Ethereum (ETH) spot market do not differ substantially from futures-based ETFs.
Indeed, in a recent statement, BlackRock said that the SEC should approve spot market cryptocurrency ETFs, considering that it has already granted approval to futures-based ETFs:
“Since the Commission has given the green light to ETFs that track ETH futures, whose prices are based on the underlying ETH spot market, we believe the Commission should also extend approval to Exchange-Traded Products (ETPs) that track direct ETH, such as the Trust.”
BlackRock accuses the SEC of inappropriately applying the Investment Company Act of 1940 to spot ETFs, arguing that the additional protections offered by the law do not address the risks associated with the underlying assets or the markets in which the ETFs hold assets, such as the potential for fraud or manipulation.
The firm also asserts that the 1940 Act’s restrictions do not specifically address an ETF’s underlying assets, whether ETH futures or spot ETH, or the markets that determine the price of those assets, including the CME ETH futures market or spot ETH markets.
BlackRock concludes that the distinction made by the SEC between futures-based ETFs and spot market ETFs is arbitrary:
“The firm believes that the difference between the registration of ETH futures ETFs under the 1940 Act and the registration of spot ETH ETPs under the 1933 Act is meaningless in the context of ETH-based ETP proposals.”
BlackRock investigates an Ethereum ETF
BlackRock recently expressed interest in expanding its presence in the cryptocurrency sector through a recent paper suggesting the possibility of launching an Ethereum-based Exchange-Traded Fund (ETF).
The world’s largest asset manager is preparing the ground for a potential spot ETF on Ethereum, as indicated by the application for an iShares Ethereum (ETH) Trust, which recently appeared on the Delaware Department of State website.
With approximately $9 trillion in assets under its management, BlackRock is considering filing a proposal for an ETF on Ethereum with the US Securities and Exchange Commission (SEC).
However, no proposal has been formally submitted to the SEC at this time.
This move follows BlackRock’s previous foray into cryptocurrency ETFs, with the submission of a spot ETF on Bitcoin to the SEC on 15 June. So, too, the initial disclosure for the iShares Bitcoin Trust had appeared on Delaware’s website a week earlier.
BlackRock’s possible entry into the Ethereum ETF market occurs at the same time as a significant increase in the price of Ether, which has reached about $2,030.
If BlackRock proceeds with the Ethereum spot ETF, it would join a number of other financial institutions that have undertaken similar initiatives. Companies such as Ark Invest, 21Shares and VanEck have also sought to offer ETFs that hold Ether directly.
In addition, Grayscale Investments has already started the process on 2 October to turn its Ethereum Trust into an Ether spot fund. Similarly, companies such as Hashdex and Invesco have filed documents with the SEC to launch their own spot Ether products.