Nasdaq’s Proposal for BlackRock’s iShares Ethereum Trust
On July 16, Nasdaq submitted a proposal to the Securities and Exchange Commission (SEC) to include staking activities in BlackRock’s iShares Ethereum Trust (ETHA), which is an exchange-traded fund (ETF). This proposed regulatory amendment sets out specific guidelines that would empower BlackRock to stake Ethereum (ETH) directly or via approved third-party staking providers.
Staking Guidelines and Obligations
The firm will categorize any rewards generated from staking as income, and it must ensure that the staked Ethereum is maintained according to criteria established in a May notice from the SEC’s Division of Corporation Finance regarding certain protocol staking operations.
Critical to the implementation is BlackRock’s obligation to secure either legal counsel clearance or federal government guidance concerning taxation before proceeding with any staking. It is also significant to note that BlackRock will not cover losses resulting from slashing or forking events. Nasdaq emphasizes that the changes proposed would help ETHA achieve returns while adhering to established rules designed to safeguard both the shareholders and the market.
Industry Trends and Other Players
BlackRock’s proposal comes as part of a growing trend among issuers aiming to obtain permission to allow their U.S.-based Ethereum products to earn rewards from protocol interactions. Other players in the industry, including Cboe, are seeking similar approvals for various funds including Fidelity’s FETH, Franklin Templeton’s EZET, Invesco Galaxy’s QETH, and 21Shares’ CETH. Meanwhile, Bitwise is also looking to receive approval for staking the ETH within its ETHW on NYSE Arca, alongside Grayscale’s request for its ETHE and mini trust.
Market Response and Future Outlook
The Nasdaq move has garnered positive feedback, such as from Bloomberg ETF analyst James Seyffart, who commented on X that it was “about time.”
As the industry prepares, the first critical deadline for previous applications is set for October, and Nasdaq’s filing for BlackRock’s ETF is expected for consideration in early April. However, Seyffart remains optimistic, suggesting that the SEC’s approval process might not take that long.
Supporting this momentum, U.S.-listed spot Ethereum ETFs saw a remarkable surge on July 16, attracting over $726 million in net flows across nine different funds, setting a daily record. The ETHA, in particular, drew in an impressive $499.2 million, which constituted approximately 69% of the total inflows, reflecting a strong interest from institutional investors who appear to be banking on Ethereum’s underlying strength, especially in relation to its framework for stablecoins and tokenized assets.
