Yesterday, the founder and CEO of BlackRock, Larry Fink, stated that he believes it is possible to launch an ETF on Ethereum spot even if the SEC manages to declare ETH a security.
He stated this during a live appearance on Fox Business.
Summary
BlackRock’s Ethereum ETF
BlackRock has not only launched on the US stock exchanges what is set to become the world’s largest Bitcoin ETF, but a few months ago it also filed a request with the SEC to launch an ETF on Ethereum spot.
Although BlackRock has a approval rating of over 99% for its ETF issuance requests, doubts are circulating about whether the SEC will approve it.
The problem is that the SEC considers ETH an unregistered security, and therefore traded on US markets illegally.
However, it is not the government agency that can decide whether an asset should be considered a security or not, so much so that a court last year ruled against the SEC itself, which claimed that XRP should be considered a security.
Actually, the issue on XRP does not seem to be completely closed yet, both because XRP has been declared not to be an investment contract if purchased on the secondary market, but nothing has been decided yet for sales on the primary market, and because the lawsuit against Ripple is not yet over. Furthermore, in other similar cases, other judges have ruled differently.
However, so far no judge has yet expressed an opinion on whether ETH should be considered a commodity like Bitcoin, or an unregistered security.
ETH as security
The issue with securities is that in the USA they can only be legally sold after receiving approval from the SEC.
ETH has not yet received this approval, also because it has never been requested.
Until last year it was believed that Ethereum was a commodity like Bitcoin, but the switch to Proof-of-Stake with the introduction of staking has questioned this definition.
It is possible to imagine that in order to reach a final judgment from a judge, which is the only way to do it, the SEC will first have to reject the requests for the issuance of ETFs on ETH spot in the USA, leading to a court appeal by the applicants.
For Bitcoin, on the other hand, something similar happened, because despite being clearly a commodity, the SEC initially rejected requests for the issuance of spot BTC ETFs in the USA.
At that point Grayscale sued the SEC, and a judge ruled in favor of Grayscale and against the SEC, paving the way for the subsequent approval.
By the end of May, the EC will necessarily have to pronounce itself on the requests for the issuance of ETFs on ETH spot, and at this point it seems likely that it will opt for an initial rejection, pending a subsequent explicit pronouncement by a court that clarifies the nature of ETH as a commodity or security.
The role of BlackRock in approving the Ethereum ETF
It is worth noting that the situation regarding Bitcoin spot ETFs began to unlock as early as June of last year, just when BlackRock submitted its request. In fact, it was known that its approval rate for ETFs was over 99%.
Later, the court ruled in favor of Grayscale at the end of August, finally resolving the issue.
So yesterday’s words from Larry Fink seem like a way to anticipate the SEC’s moves.
In other words, it’s as if they stated that their request to issue an ETF on ETH spot on US exchanges will proceed even if the SEC refuses to approve it, using the excuse of considering ETH an unregistered security.
Moreover, surely even in BlackRock they know very well that the SEC, in the midst of the electoral campaign for the November presidential elections, could opt for a rejection in May, but they also know perfectly well that the issue would only be resolved in front of a judge at that point.
BlackRock has now thrown itself headlong into the crypto sector, even launching a tokenized fund on Ethereum.
It should not be forgotten that this is a real giant, a global giant that manages over $10 trillion in assets, making it the world’s largest asset manager.
The price of Ethereum
In fact, the price of ETH, the native cryptocurrency of the Ethereum ecosystem, has not been particularly affected by the assumption that the SEC will likely reject the ETFs in May.
Shortly after mid-October, the price of ETH entered a bullrun phase, ending on March 13th.
The price went from less than $1,700 to over $2,400 by the end of 2023, then rose to $2,700 in January 2024, and later to almost $4,100 on March 12.
This is a remarkable -150% in less than five months, although there was a correction afterwards that brought it back to $3,000.
Currently it has risen to over $3,500, which is a value 115% higher than before the bullrun started.
Interestingly, however, it has not yet managed to update the highs of 2021, when it reached nearly $4,900. On the other hand, the TFs are pushing mainly Bitcoin, and it will probably take a while before they can also push ETH.
