BlackRock expands crypto footprint with Ethereum trust, embracing spot investment vehicles


16th November 2023 – (New York) Asset management giant BlackRock has embarked on a campaign to attract public investors to its newly registered Ethereum trust, signalling its increased confidence in the cryptocurrency market and its potential for growth. The move comes as regulatory restrictions surrounding investment vehicles linked to digital assets appear to be easing.

The iShares Ethereum Trust, which received registration approval last week, will provide investors with exposure to ether, the second-largest cryptocurrency by market capitalisation, without requiring direct ownership of the digital currency.

Unlike previous funds tied to cryptocurrency futures, the trust will serve as a spot investment vehicle, meaning it will hold actual ether rather than derivatives linked to the cryptocurrency. The distinction is significant, as the U.S. Securities and Exchange Commission (SEC) has expressed concerns about the potential for fraud and manipulation in the spot crypto market.

However, a recent ruling by a federal appeals court challenged the SEC’s position. The court determined that the regulator erred in rejecting an application by Grayscale Investments, a digital asset manager, to establish a spot bitcoin exchange-traded fund (ETF). This ruling has emboldened market participants, leading to a surge in applications for spot investment vehicles in recent months, restoring some confidence in the crypto industry following notable collapses last year.

BlackRock initially entered the cryptocurrency space by filing for a spot bitcoin ETF in June. Its latest move demonstrates the company’s ambition to extend its reach beyond bitcoin, which remains the most widely recognized and traded digital currency globally.

The asset management giant will face competition from established players in the crypto sector, such as Grayscale, as they vie for market share and seek to attract investors who are increasingly interested in diversifying their portfolios with exposure to cryptocurrencies.

BlackRock’s foray into the ethereum market underscores the growing acceptance of digital assets among traditional financial institutions. With the expansion of investment options in the crypto space, market participants are closely monitoring regulatory developments and anticipating further progress in facilitating institutional access to cryptocurrencies.