Last Thursday, BlackRock registered to create an Ethereum trust. People speculated that this could be the first step towards BlackRock asking the SEC to approve an ether-linked exchange-traded fund (ETF) in future.
Ever since BlackRock filed an application for a spot bitcoin ETF back in June, crypto investors have become taken with the idea that such a product would unleash a wave of new investment into bitcoin, bringing in people who have previously steered clear. Thursday’s news gave ether (the currency on the Ethereum blockchain) a boost: it jumped to its highest since April.
In all this excitement, there’s just one hitch: there’s no guarantee that the SEC will approve any of the spot bitcoin ETF applications that have been filed.
Still, the belief that an approval could be round the corner, as well as an improving outlook for risky assets more generally as investors pencil in future interest rate cuts, saw bitcoin rise 29% last month. But, after peaking at $37,978 last Thursday, the price of bitcoin has crept back down in recent days as the excitement wears off.
JPMorgan analysts said that the crypto rally was “rather overdone”. Even if a spot bitcoin ETF does get approved, JPMorgan said that it doesn’t necessarily mean new investors will be brought in. It’s more likely that funds will just move from other bitcoin-related products, the analysts said.
A fake filing appeared to show BlackRock applying to launch a fund based on Ripple’s cryptocurrency, XRP, and caused a brief spike in the token, Bloomberg News reported. It’s not the first time markets have been rattled by fake news about such filings.
Elsewhere, the European Central Bank’s chief supervisor Andrea Enria – in other words, the most important banking supervisor in the EU – warned about a loophole in the EU’s rules to protect the financial system from crypto-related risks. Enria said that under current rules, the things that banks do as a “crypto-asset service provider” (such as acting as a custodian or managing crypto portfolios) fall outside of the ECB’s purview.
This means that the ECB doesn’t have a full view of banks’ exposure to cryptocurrencies and can’t effectively apply safeguards.
His proposed solution? Add crypto-asset service providers to the list of financial institutions the ECB supervises, “as a matter of urgency.”
