The price of Ethereum jumped by 10% to surpass the $2,000 mark last week, after the world’s largest asset manager, BlackRock, filed to launch an ETF, the blockchain’s native currency. If it makes it to market, the ETF will likely have the effect of attracting billions of dollars in new investment to the cryptocurrency. BlackRock’s argument to the SEC about why the new vehicle should be approved is simple: Crypto investors deserve the kind of protection and security that a major asset manager can provide.
The Nasdaq Stock Market filed with the SEC to list BlackRock’s ETF last week. “To this point, the lack of an ETP [exchange-traded product] that holds spot ETH exposes U.S. investor assets to significant risk because investors that would otherwise seek cryptoasset exposure through a spot ETH ETP are forced to find alternative exposure through generally riskier means,” Nasdaq said in its filing. “Approval of a spot ETH ETP would represent a major win for the protection of U.S. investors in the cryptoasset space.”
An Antidote for Ethereum’s Problems
Ethereum is the world’s second largest cryptocurrency, after Bitcoin. The positive response to the BlackRock registration may help the currency move past some of the concerns that Ethereum investors have noted over the past few years. Ethereum’s notorious transaction costs, known as gas fees, have soared along with the increased activity that has come with more trading. Ethereum’s move to a proof-of-stake system last year was supposed to ease its price and congestion issues, but the BlackRock ETF may exacerbate these problems.
On the other hand, there are many benefits the currency could derive from working with the world’s largest asset manager. That may be why BlackRock emphasized safety and reliability in its filing with the SEC. Among other things, Ethereum knows that its customers would benefit from increased stability.
“Institutional investments and support will not only further solidify the industry, but also help with the overall downside volatility over time,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It will make a big difference in risk management and retirement planning if the volatility can be dampened.”
In addition to the Ethereum offering, BlackRock also has filed an application with the SEC for a spot bitcoin ETF. CEO Larry Fink said the company wants to diversify its crypto offerings, noting that crypto will “transcend any one currency.”
