Cryptocurrency markets are excited by the news of BlackRock's proposal to SECONDOn Tuesday, August 6, 2024, the American multinational investment company filed the petition related to options trading. It wants to include them in its ethereum exchange-traded fund (ETF) and iShares ethereum Trust (ETA).
BlackRock presented its proposal to the SEC through the Nasdaq International Securities Exchange. Founded in 1988, this company was initially engaged in corporate risk management. However, today it is the largest asset manager in the world. The latest reports show that the firm manages more than $10 trillion in assets as of the end of 2023.
Plus, these are cryptocurrencies, and while some believe that digital assets are unreliable and that crypto exchanges are too volatile for comfort, this market is still one of the largest in the world. And now, BlackRock wants to use its experience with commodity ETFs to achieve similar success with digital currencies.
The company said that if the SEC approves the project, it will begin by introducing the assets of the iShares ethereum Trust, all of which are composed solely of ethereum. Coinbase will be the holder of the latter. On the other hand, the Bank of New York Mellon will hold the cash assets in its possession.
To avoid complications and ensure security, the trust will refrain from participating in eth staking. In addition, Nasdaq announced that this project will allow it to create more investment tools for ethereum. It also aims to make ethereum's blockchain technology and cryptocurrencies more accessible to investors who prefer traditional markets.
That means Nasdaq could eventually sell cryptocurrencies on those exchanges, and this is a big win. After all, many people see decentralized finance (DeFi) as the future, and this move could bring millions of customers into the crypto world.
How will the Nasdaq proposal work?
According to BlackRock, the assets held by the iShares ethereum Trust will not be the same as investing in eth directly. Investors would buy into the trust, rather than buying the specific eth cryptocurrencies.
However, this will give them some exposure to ethereum. The firm is targeting traditional investors, who prefer to trade more familiar assets. Many avoid cryptocurrency exchanges due to their unpredictability, but they might now have the chance to trade them on the public stock market.
Additionally, the options market allows people to buy or sell an asset at a specific price before a specific date. There are many types of assets available, such as stocks, commodities, and ETFs. Traders often prefer to buy options, as this way of investing protects them against potential losses.
In addition, options offer much more flexibility compared to futures. Market participants can decide for themselves when to enter or exit trades.
What are the chances of BlackRock succeeding in this endeavor?
Like Nasdaq, BlackRock has a lot of experience in listing various options in trusts. However, it has primarily worked with commodities. For example, it built iShares COMEX Gold Trust and iShares Silver TrustAs a result, the company knows what it is doing and can easily add options to the prices of spot cryptocurrency ETFs.
Additionally, BlackRock is one of the leading issuers of btc and eth spot ETFs in the United States. SoSo Value The data shows that the company iShares bitcoin Trust (IBIT)’s net assets reached $18.28 billion as of Monday, August 5, 2024. This figure makes the latter the largest spot btc ETF in the world.
Bloomberg Intelligence ETF analyst James Seyffart analyzed Nasdaq’s proposal to add options on eth ETFs. Seyffart expects the SEC to announce its final decision around Wednesday, April 9, 2025.
After all, the SEC is not the only agency making this decision. It has to discuss the issue with other institutions, such as the Commodity Futures Trading Commission (CIATC).Federal Trade Commission (CFTC)) and the Options Clearing Corporation (OCC).
Meanwhile, BlackRock’s iShares ethereum Trust (ETHA) is thriving. According to the latest report, its net assets reached $568.65 million. As a result, this fund currently ranks as the third-largest spot eth ETF in the US market.
Despite the volatility in global markets, ethereum spot ETFs have enjoyed strong cash inflows. ETHA was the biggest gainer, thanks to the Nasdaq filing. On Tuesday, August 6, it gained more than $108 million after announcing the news.
What does the president of an ETF shop think about these developments?
Nate Geraci, president of ETF Store, claimed that BlackRock’s ethereum ETF could soon earn a spot among the top 10% of ETF launches in 2024. The company’s IBIT bitcoin ETF has already achieved that feat. Moreover, outflows from the latter have been steadily declining. That indicates that the fund is strong and developing well. Accordingly, investors are expecting good news about the bitcoin ETF fund in the near future.
In the filing, Nasdaq and BlackRock said that offering options on the trust will give traders and investors an additional tool to invest. This will greatly benefit market participants by allowing them to invest at lower costs.
On Tuesday, the price of eth soared above $2,500. At the same time, the global market showed a strong recovery. It has been trading in bearish territory for the past few days due to fears of a US recession. But Nasdaq managed to banish these fears for now with its revolutionary step.
What will the SEC decide?
There is a lot of speculation on this topic, both among analysts and investors. However, there are rumors that the US Securities and Exchange Commission (SEC) may have given its approval to this proposal. Of course, this is a preliminary approval, but if the agency's opinion is positive, this will make the path much easier for the Nasdaq.
Some traders are already buying ETFs in advance. According to the report, the SEC has approved three applicants, BlackRock, VanEck and Franklin Templeton. However, others are also trying to obtain permission for their projects.
Moreover, some analysts expect that eight spot Ether ETFs will be launched at the same time. According to some reports, the SEC has given the final orders to asset managers, who are almost ready to launch Ether ETFs.
ETF analyst Eric Balchunas noted that the agency gave issuers until Tuesday, July 16, 2024, to submit their final S-1 filings. All applicants must attach the fee amount to their spot Ether ETFs when they submit their revised proposals.
If the SEC approves Nasdaq and BlackRock’s filing, it could change the world of cryptocurrencies, making trading digital currencies much simpler for traditional investors. After all, this market is vast and powerful, with a substantial market capitalization. But it has the potential to achieve much more and this project would definitely help achieve that goal.
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