BlackRock Might Backtrack on Ethereum ETF Application Amid ‘Very Little’ Demand

After its successful launch of the spot Bitcoin ETF in January 2024, the world’s largest asset manager BlackRock has been pushing ahead for a spot Ethereum ETF application. However, chances are that the asset manager might reconsider its efforts citing “little” demand from clients for Ethereum, in comparison to Bitcoin.

Will BlackRock Continue the Push for spot Ethereum ETF?

During a fireside chat at the Friday Bitcoin Investor Day conference in New York, Robert Mitchnick, BlackRock’s head of digital assets, emphasized the firm’s client base’s primary focus on Bitcoin. He noted, “I can say that for our client base, bitcoin is overwhelmingly the number one focus and a little bit Ethereum”. He also mentioned that the demand for every other crypto asset is “very, very little.”

However, he didn’t comment anything for now on whether BlackRock will continue or not on its pursuit of Ethereum ETF approval. Last week, BlackRock got Digital Assets Product Strategist Matt Kunk on board to lead the company’s efforts on iShares digital assets ETFs. Ethereum proponents have come in defense of the asset class.

For now, the US SEC has delayed BlackRock’s Ethereum ETF application to May 2024. There have been ongoing discussions that BlackRock will also pursue ETFs for other digital assets. Mitchnick clarified that there’s a misconception within the crypto industry regarding the asset manager’s intentions to offer a wide array of other services. “That’s not our primary focus,” he emphasized.

On the other hand, BlackRock continues to explore the industry. The asset manager recently announced the launch of its BUIDL stablecoin on Ethereum blockchain, as part of its tokenization efforts.

Will the US SEC Wage A War Against Ethereum?

There are strong discussions in the industry that the US SEC is considering putting a ‘security tag’ for Ethereum just like they did with XRP. This might further reduce the chances of the Ethereum ETF approval by the securities regulator.

According to Alex Thorn, head of firmwide research at Galaxy Digital, if the SEC is inquiring about crypto firms’ interactions with the Ethereum Foundation, it could indicate scrutiny over whether the original Ethereum initial coin offering (ICO) in 2014 was an unregistered securities offering, rather than just categorizing the current secondary trading of ETH as securities trading.

Thorn speculated that while the SEC might distinguish between the ICO and the present secondary trading of ETH, taking any enforcement action against the Ethereum Foundation nearly a decade later would be “highly unusual.”

However, crypto industry players like Coinbase have come in support of Ethereum stating that CFTC and the SEC cannot have different takes on the asset class.