BlackRock submitted an application to the SEC to update the operating conditions of the iShares Ethereum Trust fund.
She wants to redeem Ethereum in kind.
In addition, at the meeting with the regulator, the investment firm discussed the prospect of Ethereum staking functionality in the ETF.
BlackRock submitted an update to the U.S. Securities and Exchange Commission (SEC) regarding its iShares Ethereum Trust fund, specifically to allow the redemption of assets not in cash but in the cryptocurrency itself.
This process allows investors to receive Ethereum itself instead of dollars, increasing liquidity, transparency, and efficiency of ETF management. It also opens up the potential for staking — where the asset contained in the ETF can be used to participate in the Ethereum network and earn rewards.
In this proposal submitted to the SEC and Nasdaq, BlackRock:
proposed to allow the redemption of shares in the form of Ethereum, not just cash;
added a new custodian for the asset, in addition to Coinbase Custody Trust;
changed the name of the fund (the new name has not yet been disclosed);
updated the creation and redemption procedures for the ETF.
Coinbase Custody Trust Company acts as the custodian of assets in the form of Ethereum, while Bank of New York Mellon manages the cash assets of the fund.
In turn, representatives of BlackRock, including head of digital assets Robert Mitnick, met with members of the SEC crypto group to discuss:
the possibility of adding staking to the Ethereum ETF;
standards for the approval of new crypto funds;
technical parameters for launching options on crypto ETFs, including position limits and liquidity.
"This could be a 'quantum leap' for the industry," Mitnick said in March, speaking about the potential of staking in the ETF.
Recall that the regulator postponed the decision on staking in the Grayscale Investments Ethereum ETF and the in-kind redemption of shares in products from VanEck and WisdomTree until June 2025.
