The world’s largest asset manager, BlackRock, has taken the first formal step towards an Ethereum (ETH) fund that can provide investors with not only price gains, but also passive income. American regulations recently allowed this and BlackRock immediately seized the opportunity.
Legal foundation for new Ethereum fund
The wealth giant is preparing to launch a new Ethereum fund. Yesterday, BlackRock registered a separate legal entity in Delaware under the name iShares Ethereum Staked Trust.
Such a trust is necessary because American rules require that every listed fund be placed in its own structure. It offers investors protection and makes the fund legally and fiscally suitable for listing on the stock exchange.
The fact that the registration took place in Delaware is no coincidence. The state has been known for years for its favorable legislation for financial products; virtually all major funds are established there because of the efficient and flexible legal environment.
Now we have to wait for the official next step: an application to the SEC, in the form of a so-called S-1 filing under the Securities Act of 1933. According to Bloomberg-ETF analyst Eric Balchunas, that application can be expected “short term”.
The tax authorities give the green light
Until recently, staking was simply not an option for ETF providers. The SEC banned any form of staking within exchange funds, forcing the first batch of Ethereum spot ETFs to immediately remove their yield component.
But in early November the tide turned. The US Internal Revenue Service (IRS) issued new guidelines that allow staking rewards within regulated funds without causing tax problems. This so-called “safe harbor” arrangement finally gives the market the clarity it has been waiting for for years.
Staking means that a fund temporarily freezes its crypto, in this case ETH, to secure the network and process transactions. In return, it receives rewards, similar to interest.
A spot ETF is a stock exchange fund that holds real coins. So it actually buys ETH and follows the price one to one. This is ideal for investors: they invest through their normal broker and can also rake in staking returns without even having to do anything.
Grayscale recently added staking to its existing Ethereum funds, and Bitwise launched a Solana fund in late October that also provides shareholders with passive income. The list of providers who are making striking mainstream is growing rapidly.
Source: https://newsbit.nl/blackrock-zet-eerste-stap-naar-ethereum-fonds-met-passief-inkomen/
