BlackRock filed an application with the SEC to update the operational conditions of the iShares Ethereum Trust fund.
It wants to redeem Ethereum in physical form.
Additionally, at the meeting with the regulator, the investment firm discussed the prospects of the Ethereum staking feature in the ETF.
BlackRock submitted an update to the U.S. Securities and Exchange Commission (SEC) regarding its iShares Ethereum Trust fund, specifically aiming to allow the redemption of the asset not in cash form, but in the cryptocurrency itself.
This process allows investors to receive Ethereum instead of dollars, which increases liquidity, transparency, and efficiency in managing the ETF. It also opens up the potential for staking — when the asset held 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, rather than just cash;
added a new asset custodian, in addition to Coinbase Custody Trust;
changed the fund's name (the new name has not yet been disclosed);
updated the procedures for creating and redeeming ETFs.
Coinbase Custody Trust Company acts as the custodian of assets in the form of Ethereum, while Bank of New York Mellon manages the fund's cash assets.
In turn, representatives of BlackRock, including the head of digital assets Robert Mitchnik, met with members of the SEC's crypto group to discuss:
the possibility of adding staking to the Ethereum ETF;
standards for approving 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," Mitchnik said in March, speaking about the potential of staking in ETFs.
Recall that the regulator postponed a decision on staking in the Grayscale Investments Ethereum ETF and natural redemption of shares in products from VanEck and WisdomTree until June 2025.
Later, the lobbying group Crypto Council for Innovation and nearly 30 crypto companies sent a letter to SEC Commissioner and head of the crypto group Hester Peirce requesting clarification on staking.
