Only a few days after the landmark approval of spot Bitcoin (BTC) exchange-traded funds (ETFs) in the US, financial powerhouse BlackRock is now setting its sights on Ethereum (ETH) ETF. One expert, however, thinks that it may not be as easy as it sounds.
BlackRock CEO Reveals Ethereum ETF Plan
As soon as the first trading day of spot Bitcoin ETFs fired up, BlackRock CEO Larry Fink immediately hyped their plan about crafting the same financial instrument for Ethereum.
“I see value in having an Ethereum ETF,” Fink commented last Friday during an interview with CNBC. “These are just stepping stones towards tokenization and I really do believe this is where we’re going to be going.”
And just like that, it got the cryptocurrency community all excited about the prospect of an Ethereum ETF in the US. Others also preached about how the developments may finally lead to the much-needed validation of crypto from traditional finance (TradFi) players.
The Challenges of an ETH ETF
For CF Benchmarks CEO Sui Chung, it may be hard to immediately follow up the release of spot Bitcoin ETF with another one based on Ethereum.
First of all, droves of investors just bought into BTC ETFs, which meant their craving to diversify their portfolio in another investment class has already been fulfilled. Thus, Chung questioned in a Coindesk interview if they would still see the need to pour their money into another crypto-based instrument.
Chung also said Ethereum ETFs may be hard to market at this moment just after they convinced people about why Bitcoin ETFs are the superior breed of crypto investments to clients. Likewise, one has to take note of BTC’s peculiar nature based on its market behavior and price history, which again elevates it from Ethereum.
The CF Benchmark boss further criticized the way Fink is hyping up Ethereum ETFs by mentioning “tokenization” along the way. Chung responded that bringing up this subject could require a more thorough explanation to casual or traditional investors of what they are and what they do. What’s more, it would require issuers to come up with ways of explaining the intricacies of staking, smart contracts, and decentralized finance (DeFi) in the Ethereum ecosystem in a way the general public could grasp.
Let’s not even get to the part where the SEC remains vague as to whether or not Ethereum is considered a commodity or security.
A couple of months ago, the regulator’s chairman, Gary Gensler, was asked by the members of Congress to comment on the status of Bitcoin to which he replied, “I would say it’s not a security and then the test is otherwise for other laws.”
However, when asked the same question in connection to ETH, Gensler drove a nail in the coffin with the answer, “I am not going to speak about any specific one.”