Posted on

Ethereum ETF: Franklin Templeton Enters The Fray As ETH Rallies

Wall Street titan and Asset manager Franklin Templeton has applied for an Ethereum Spot Exchange-Traded Funds (ETF) after a struggle to gain approval for their Bitcoin Spot ETF in early January.

Asset Manager Files For Spot Ethereum ETF

Asset managers have gravitated toward the Ethereum spot ETF since the United States Securities and Exchange Commission (SEC) approved the Spot Bitcoin ETF. Franklin Templeton is the latest manager to apply with the SEC to get approval for this financial product. 

The asset manager’s move came after successfully introducing the BTC spot ETFs. This is a notable step toward making more crypto investment products accessible to institutional and individual investors.

James Seyffart, a senior analyst from Bloomberg Intelligence, also shared the update with the crypto community on X (formerly Twitter). Seyffart’s X post included a screenshot of the asset manager’s filing and data regarding other applicants.

According to the post, Franklin Templeton is the eighth company in the cryptocurrency market to file for product approval. Previous asset managers to file applications for Ethereum ETFs include Hashdex, BlackRock, Fidelity, Ark and 21Shares, Grayscale, VanEck, Invesco, and Galaxy. 

Per the official filing, a Delaware statutory trust is how the Franklin Ethereum Trust is set up. The ETF aims to give investors access to ETH in a regulated manner by allowing them to store it directly through a custodian.

It states in the company’s S-1 filing that the proposed “Franklin Ethereum Trust” will hold ETH and “may, from time to time, stake a portion of the fund’s assets through one of the more trusted staking providers.”

Staking is the act of locking up digital currency to maintain the operations of a blockchain network. They plan to stake some of the ETF’s ETH holdings to supplement its income through staking rewards.

The Price Of ETH Rallies Amidst The Update

Franklin Templeton’s spot Ethereum ETF application was made in light of the price of ETH experiencing an uptick. However, no solid proof exists that the latest development impacted the price of crypto assets.

Related Reading: Ethereum ETFs Approval Date Set For May 23, Forecasts Suggest ETH Could Reach $4,000

Ethereum was trading at $2,661 as of press time, indicating an increase of over 7% in the past 24 hours. Data from CoinMarketCap shows that its market capitalization is also on the upside, marking an increase of over 7%. 

Meanwhile, its trading volume has increased significantly by over 172% in the past day. Due to the rise, ETH now ranks third in the entire crypto market by trading volume.

Ethereum

Posted on

Bitcoin Spot ETF Applicants To Integrate Mandatory Cash Redemption Model

Recent reports have revealed that the United States Securities and Exchange Commission (SEC) has implemented a “new regulatory standard” for all Bitcoin Spot Exchange-Traded Fund (ETF) applicants while awaiting approval from the regulatory body.

Cash Redemption Model For Bitcoin ETF Applicants

Top Bloomberg Analyst James Seyffart took to X (formerly Twitter) to share the latest update by the regulatory watchdog. According to him, every Bitcoin Spot ETF applicant will have to bend their knees to this new model.

The SEC’s latest “Cash Redemption Model” came amid the spot Bitcoin ETF issuers ironing their filings with the US regulator. It seems that the SEC is unwavering in its demand, rather than approve the different model that other issuers have suggested.

The model enables authorized participants to deposit funds in the ETF equal to the net asset value of the creation units to be created. The underlying assets, which in this case is Bitcoin, are subsequently purchased by the fund using this money.

Seyffart’s X post was accompanied by another post from financial lawyer Scott Johnsson, who initially shared the update. The financial lawyer shared a screenshot which revealed more details about the new model by the regulatory body.

Johnsson asserted that Invesco is the most recent company to adopt the cash creation and redemption standard for its ETF. The trust anticipates that “creation and redemption transactions will be made in cash at first.”

However, in the future, the Trust may permit/require creation and redemption transactions to be carried out with the “in-kind” model. This is the initial model that several ETF applicants have suggested.

For the in-kind model, the participant deposits a collection of securities that are weighted and composed in accordance with the ETF’s portfolio. This will allow investors to receive creation units from the fund without having to sell the securities for cash instantly.

Bloomberg Senior ETF analyst, Eric Balchunas has also confirmed Invesco’s adoption of the latest cash model. The analyst asserted that the firm is embracing the initiative as per its just updated S-1 filing.

Blackrock’s In-Kind Redemption Model

Blackrock recently adjusted its Spot Bitcoin Exchange-Traded Fund (ETF) application introducing an in-kind redemption model called “Prepay.” This is to tackle the restrictions that financial firms are facing in order to hold cryptocurrencies.

The adjustment aims to make it easier for Wall Street Banks to participate in the fund. With this modification, authorized participants (APs) would be allowed to issue new fund shares using cash instead of just Bitcoin. 

The funds that the APs use for this procedure can subsequently be converted into Bitcoin through an intermediary and kept in storage by the ETF’s custody provider. As a result of this, it provides access to banks that are unable to store cryptocurrencies directly. 

So far, Blackrock believes the model will offer greater protection against market manipulation, which has since been the major reason behind the SEC’s rejection of an ETF.

Bitcoin

Posted on

Bitcoin Spot ETF Applicants To Integrate Mandatory Cash Redemption Model

Recent reports have revealed that the United States Securities and Exchange Commission (SEC) has implemented a “new regulatory standard” for all Bitcoin Spot Exchange-Traded Fund (ETF) applicants while awaiting approval from the regulatory body.

Cash Redemption Model For Bitcoin ETF Applicants

Top Bloomberg Analyst James Seyffart took to X (formerly Twitter) to share the latest update by the regulatory watchdog. According to him, every Bitcoin Spot ETF applicant will have to bend their knees to this new model.

The SEC’s latest “Cash Redemption Model” came amid the spot Bitcoin ETF issuers ironing their filings with the US regulator. It seems that the SEC is unwavering in its demand, rather than approve the different model that other issuers have suggested.

The model enables authorized participants to deposit funds in the ETF equal to the net asset value of the creation units to be created. The underlying assets, which in this case is Bitcoin, are subsequently purchased by the fund using this money.

Seyffart’s X post was accompanied by another post from financial lawyer Scott Johnsson, who initially shared the update. The financial lawyer shared a screenshot which revealed more details about the new model by the regulatory body.

Johnsson asserted that Invesco is the most recent company to adopt the cash creation and redemption standard for its ETF. The trust anticipates that “creation and redemption transactions will be made in cash at first.”

However, in the future, the Trust may permit/require creation and redemption transactions to be carried out with the “in-kind” model. This is the initial model that several ETF applicants have suggested.

For the in-kind model, the participant deposits a collection of securities that are weighted and composed in accordance with the ETF’s portfolio. This will allow investors to receive creation units from the fund without having to sell the securities for cash instantly.

Bloomberg Senior ETF analyst, Eric Balchunas has also confirmed Invesco’s adoption of the latest cash model. The analyst asserted that the firm is embracing the initiative as per its just updated S-1 filing.

Blackrock’s In-Kind Redemption Model

Blackrock recently adjusted its Spot Bitcoin Exchange-Traded Fund (ETF) application introducing an in-kind redemption model called “Prepay.” This is to tackle the restrictions that financial firms are facing in order to hold cryptocurrencies.

The adjustment aims to make it easier for Wall Street Banks to participate in the fund. With this modification, authorized participants (APs) would be allowed to issue new fund shares using cash instead of just Bitcoin. 

The funds that the APs use for this procedure can subsequently be converted into Bitcoin through an intermediary and kept in storage by the ETF’s custody provider. As a result of this, it provides access to banks that are unable to store cryptocurrencies directly. 

So far, Blackrock believes the model will offer greater protection against market manipulation, which has since been the major reason behind the SEC’s rejection of an ETF.

Bitcoin

Posted on

Galaxy Digital and Invesco Bitcoin Spot ETF Join BlackRock On The DTCC

In a recent development, another proposed Spot Bitcoin ETF has been listed on the Depository Trust and Clearing Corporation’s (DTCC) website, becoming the second proposed Spot Bitcoin ETF to appear on the corporation’s website. 

BTCO Joins IBTC On DTCC Website

The Invesco Galaxy Bitcoin ETF under the ticker ‘BTCO’ recently appeared on the DTCC website, joining BlackRock’s spot Bitcoin ETF, which goes under the ticker ‘IBTC’ as uncertainty around a possible approval of these funds continues to heighten. 

Galaxy Digital Invesco Spot Bitcoin ETF DTCC

Many had speculated an approval was imminent when BlackRock’s IBTC was earlier listed. However, the optimism has sort of cooled off following a recent revelation by a spokesperson for the financial services company. The representative clarified that the listing of these ETFs was simply “Standard Practice” and that it doesn’t indicate any potential approval by the SEC. 

An ETF expert had also weighed in and stated that DTCC’s listing didn’t mean anything in the grand scheme of things regarding a possible approval of Bitcoin ETFs by the United States Securities and Exchange Commission (SEC). Going by this, the DTCC listing only suggests that these asset managers are preparing just in case they get approved by the SEC. 

Such preparations also include asset managers BlackRock and VanEck recently revealing their plans to begin seeding for their respective funds. While such a move doesn’t guarantee that the SEC is likely to approve these funds anytime soon, it, however, shows the optimism of these firms that their Spot Bitcoin ETF will launch sooner or later. 

Valkyrie Joins The Spot Bitcoin ETF Amendment Train

In a post shared on his X (formerly Twitter) platform, Bloomberg analyst James Seyffart noted that the asset management firm Valkyrie had joined the “prospectus amendment train” with the latest filing of their revised Spot Bitcoin ETF prospectus. Valkyrie joins the likes of ARK Invest, BlackRock, Fidelity, and Bitwise, who have also filed amendments to their prospectus. 

Seyffart happens to be one of those who believe that these amendments could mean something. ARK Invest was the first asset manager to amend its prospectus, which led Seyffart and fellow Bloomberg analyst Eric Balchunas to predict that the US Securities and Exchange Commission (SEC) could approve a fund as early as next year.

Meanwhile, it is worth mentioning that the SEC has so far not said anything regarding Grayscale’s application despite the Commission opting not to file an appeal. But that could change soon as ETF enthusiast and prominent financial lawyer Scott Johnsson said that the Commission is set to have a closed meeting on November 2; its first since the Grayscale deadline expired, and one of the agenda for the meeting includes resolving litigation claims. 

Bitcoin price chart from Tradingview.com (Spot Bitcoin ETF)