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BlackRock Intensifies Crypto Bet in Groundbreaking Ethereum ETF Filing, Amidst Tether FUD
- BlackRock filed for a Spot Ethereum ETF, a major step in its expanding crypto investment strategy.
- The firm’s prior Bitcoin ETF filing expressed concerns over the risks stablecoins, especially Tether, pose to the broader digital asset market.
Filing Adds to ETF Excitement
After recent fake news of an XRP ETF filing and Bitcoin ETF approval, the buzz about exchange-traded funds in crypto has not stopped. On top of this, on Thursday local time, BlackRock filed for a Spot Ethereum ETF in the United States.
BlackRock is proposing to convert its trust into a “spot” Ethereum ETF, directly owning Ether instead of futures products. This move follows a recent court decision favouring spot crypto ETFs, countering the SEC’s concerns about market manipulation. BlackRock’s initiative, expanding beyond its earlier Bitcoin ETF filing, marks its growing interest in the crypto space. The ETF’s Ethereum would be held in custody by Coinbase Custody, and Kraken subsidiary CF Benchmarks would serve as the ETF benchmark. Both companies are also BlackRock’s partners for the BTC filing.
BlackRock’s Tether FUD
BlackRock’s Bitcoin ETF filing meanwhile raised concern over the potential risks that stablecoins, particularly Tether (USDT) and USDC, may pose to the Bitcoin market and other digital asset markets. The company highlighted that although its trust does not invest directly in stablecoins, the digital asset market’s heavy reliance on these stablecoins could lead to broader market vulnerabilities.
This concern is underscored by Tether’s significant position in the crypto market, being the third-largest cryptocurrency with a substantial market cap and the most-traded digital asset. As a stablecoin, USDT is frequently used in the crypto market for quick trade entries and exits, serving as an alternative to traditional banking or fiat currency transactions. BlackRock’s caution reflects a recognition of the interconnectedness and potential systemic risks within the digital asset ecosystem.
Because a large portion of the digital asset market still depends on stablecoins such as Tether and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to dramatic market volatility in digital assets more broadly.
BlackRock Despite the news, Ethereum (ETH) is losing ground in line with the overall market. At the time of writing, ETH has dropped 4.5% in price as CoinMarketCap shows. Currently, one ETH is trading for US $1,958 (AU$ 3,026).
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
