In a recent interview, SEC Commissioner Hester Peirce expressed her support for a spot Bitcoin ETF, which would track the price of the cryptocurrency directly. She said that the SEC should not interfere with the market’s demand for such a product, and that the agency’s role is to protect investors from fraud and manipulation, not to dictate their investment choices.
Peirce, who is known as “Crypto Mom” for her pro-crypto stance, argued that there is no reason for the SEC to stand in the way of a spot Bitcoin ETF, as long as the applicants meet the legal requirements and disclose the risks involved. She said that the SEC has been too slow and cautious in approving crypto-related products, and that this has hindered innovation and competition in the industry.
She also pointed out that the SEC has already approved several ETFs that track Bitcoin futures, which are derivatives contracts based on the price of Bitcoin. She said that these products are more complex and costly than a spot Bitcoin ETF, and that they may not reflect the true value of the underlying asset. She said that a spot Bitcoin ETF would provide investors with a simpler and more direct way to access the crypto market, and that it would also increase liquidity and transparency in the sector.
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BlackRock filed an S-1 form with the SEC for the iShares Ethereum Trust
BlackRock, the world’s largest asset manager, has taken a step closer to launching an Ethereum-based exchange-traded fund (ETF). The company filed an S-1 form with the US Securities and Exchange Commission (SEC) for the iShares Ethereum Trust, a fund that will track the performance of the second-largest cryptocurrency by market capitalization.
The iShares Ethereum Trust will offer investors exposure to Ethereum without having to buy, store, or manage the digital asset themselves. The fund will hold Ethereum and value its shares based on the current market price of the cryptocurrency. The fund will also charge a management fee, which has not been disclosed yet.
The filing comes as the SEC is reviewing several applications for Bitcoin ETFs, which have been pending for years. The regulator has repeatedly delayed or rejected such proposals, citing concerns over market manipulation, custody, and investor protection. However, some analysts believe that the SEC may finally approve a Bitcoin ETF this year, as the crypto industry has matured and gained more institutional adoption.
If the SEC approves a Bitcoin ETF, it could pave the way for other crypto ETFs, such as the iShares Ethereum Trust. Ethereum is the second-most popular cryptocurrency after Bitcoin, and it powers a wide range of decentralized applications (dApps) and smart contracts on its network. Ethereum is also undergoing a major upgrade, known as Ethereum 2.0, which aims to improve its scalability, security, and energy efficiency.
BlackRock is not the only company that is eyeing an Ethereum ETF. In Canada, three Ethereum ETFs have already been launched this year, following the approval of four Bitcoin ETFs. In Europe, several Ethereum ETPs (exchange-traded products) are also available on various exchanges. However, the US market is still waiting for its first crypto ETF, which could attract more investors and liquidity to the crypto space.
Peirce’s comments come at a time when several companies are seeking approval from the SEC for a spot Bitcoin ETF, including VanEck, Valkyrie, and WisdomTree. The SEC has not yet made a decision on any of these applications, and it is unclear whether it will do so before the end of the year. Peirce said that she hopes that the SEC will act soon, and that she will continue to advocate for a more open and welcoming approach to crypto regulation.
Peirce is not the only one who supports the spot Bitcoin ETF. Several prominent figures in the crypto space have also voiced their opinions in favor of such a product, including Michael Saylor, the CEO of MicroStrategy, Cathie Wood, the founder of ARK Invest, and Anthony Pompliano, the co-founder of Morgan Creek Digital. They have all argued that a spot Bitcoin ETF would benefit both investors and the crypto ecosystem as a whole, and that it would help legitimize Bitcoin as an asset class.
Grayscale Enters Transfer Agency and Service Agreement with BNY Mellon
In a major development for the cryptocurrency industry, Grayscale Investments announced that it has entered into a Transfer Agency and Service Agreement with The Bank of New York Mellon Corporation (BNY Mellon) for its proposed spot Bitcoin ETF. This means that BNY Mellon will provide fund accounting and administration services for the ETF, as well as transfer agency and ETF services, if and when it is approved by the U.S. Securities and Exchange Commission (SEC).
Grayscale is the largest digital asset manager in the world, with over $50 billion in assets under management as of November 2023. It currently offers several products that allow investors to gain exposure to cryptocurrencies, such as the Grayscale Bitcoin Trust (GBTC), which is a private placement that holds bitcoin and trades on the OTCQX market. However, GBTC is not an ETF, which means that it does not track the price of bitcoin directly, and often trades at a premium or discount to its net asset value (NAV).
An ETF, on the other hand, is a type of investment fund that is traded on a stock exchange and tracks the performance of an underlying asset or index. An ETF typically has lower fees, higher liquidity, and more transparency than a private placement. A spot Bitcoin ETF would allow investors to buy and sell shares of a fund that holds bitcoin directly, without having to deal with the complexities and risks of storing and transferring the cryptocurrency themselves.
Grayscale has been pursuing a spot Bitcoin ETF for several years, and has filed multiple applications with the SEC. However, the regulator has not approved any such product yet, citing concerns about market manipulation, investor protection, and custody issues. The SEC has also rejected several other proposals for Bitcoin ETFs from other companies, such as VanEck, Valkyrie, and WisdomTree.
However, Grayscale believes that the market conditions have changed significantly since its last filing in April 2021, and that it has addressed the SEC’s main concerns by partnering with BNY Mellon. BNY Mellon is one of the oldest and most respected financial institutions in the world, with over $45 trillion in assets under custody and administration. It is also the first major global bank to announce plans to provide integrated services for digital assets, such as custody, transfer, issuance, redemption, and servicing.
By working with BNY Mellon, Grayscale hopes to demonstrate to the SEC that its spot Bitcoin ETF will have robust operational and regulatory safeguards, as well as enhanced liquidity and efficiency. Grayscale also stated that it will continue to engage with the SEC and other regulators to educate them about the benefits of a spot Bitcoin ETF for investors and the broader crypto ecosystem.
Grayscale’s announcement comes at a time when there is growing demand and interest for Bitcoin ETFs in the U.S. In October 2021, the SEC approved the first Bitcoin futures ETFs, which are funds that track the price of bitcoin futures contracts traded on regulated exchanges.
These products have attracted billions of dollars in inflows since their launch, indicating a strong appetite for crypto exposure among institutional and retail investors. However, many experts argue that futures ETFs are inferior to spot ETFs, as they are more expensive, less efficient, and less reflective of the actual price of bitcoin.
Therefore, many investors are eagerly awaiting the approval of a spot Bitcoin ETF in the U.S., which could potentially unleash a wave of capital into the crypto market and boost the adoption and legitimacy of bitcoin as an asset class. Grayscale’s partnership with BNY Mellon is a significant step towards achieving this goal and could pave the way for other crypto companies to follow suit.