BlackRock has signed up to a modern fund listed on the Ethereum Exchange in Delaware, signaling that the $13.5 trillion asset manager is now ready to expand beyond its flagship Ethereum ETF product.
Registering a name in the state of Delaware is one of the first steps a fund issuer must take to apply for a modern ETF. However, BlackRock still needs to submit other relevant documents for the proposed product to gain regulatory approval.
It would also complement BlackRock’s iShares Ethereum Trust ETF (ETHA) that it has attracted $13.1 billion value of inflows since launch in July 2024. BlackRock has not added staking to its spot Ethereum product, stating on their website:
“No, the iShares Ethereum Trust ETF will not be investing its ether at this time. Staking involves operational complexities and regulatory issues that make it unfeasible at this time.”
However, in July they proposed with the SEC to change the rules to include staking in ETHA along with other issuers.
The U.S. Securities and Exchange Commission under Trump has been more open to modern exchange-traded cryptocurrency products and recently introduced a general listing standard that allows for faster approvals because each application no longer has to be assessed on a case-by-case basis.
Bloomberg ETF analyst Eric Balchunas noted that the stock’s BlackRock ETH ETF product is registered under the Securities Act of 1933, which requires high transparency and investor protections, as well as full disclosure before shares are sold to the public.
There are currently about 70 crypto products awaiting regulatory approval, which was held up by the U.S. government shutdown in October and November.
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BlackRock’s filing follows REX-Osprey and Grayscale’s launch of ETF products containing staked ETH funds in September and October.
Staked ETH ETFs can offer more lucrative returns
Incorporating staking into an Ethereum ETF could enhance returns by adding a fixed yield component in addition to price exposure, thus transforming the fund into a total return product.
It could therefore make the product more attractive to profit-seeking investors who may have avoided Ethereum ETF products due to lack of income.
The average annual return on ETH staking is approximately 3.95%, According to to Blocknative data.
BlackRock is not participating in the altcoin ETF wave
While other issuers have filed to create a number of altcoin-focused ETFs in recent months, BlackRock appears to be abstaining, having only recently filed in September to create the Bitcoin Premium Income ETF as a follow-up to the iShares Bitcoin Trust ETF.
The Bitcoin Premium Income ETF also aims to generate profit by selling covered call options and collecting premiums.
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