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NEW YORK – BlackRock (NYSE:), the world’s largest asset manager, took a major step toward the adoption of cryptocurrencies by beginning moves last week for an exchange-traded fund (Ether-tracking Exchange -Traded Fund, ETF), signaling increased optimism in the digital asset sector. The move comes as the price recently hit $35,000, its highest level since the market crashed in 2022.
The cryptocurrency sector has seen intense activity following several significant events. During the last week of October 2023, Ether’s value rose 10% to around $2,100, leading some investors to believe the prolonged “crypto winter” may be coming to an end .
This renewed enthusiasm was reinforced by BlackRock’s recent filing of an ETF that would track the price of XRP, issued by . This filing suggests growing confidence among traditional financial institutions in the potential of cryptocurrencies.
The backdrop to these filings includes a series of interactions between the cryptocurrency industry and regulators. In August 2023, Grayscale Investments won a legal battle against the Securities and Exchange Commission (SEC), which had been criticized for its “arbitrary and capricious” actions regarding cryptocurrency ETF applications. This victory was seen as a positive sign for the sector, with hopes that a Bitcoin FTE could soon be traded on conventional exchanges.
Unlike Grayscale’s victory, the SEC’s stance over the years has been cautious. From mid-2021 to August 2022, while it approved ETFs betting on future bitcoin prices, it rejected applications for ETFs directly tied to the current bitcoin price. This distinction is crucial because it allows investors to gain exposure to bitcoin without the need for digital wallets, by holding shares in a fund containing the cryptocurrency.
Following Grayscale’s legal challenge and June 2022 victory against the SEC’s earlier ruling, two SEC offices began working with companies to create Bitcoin ETFS.
Despite this progress and the recent measures taken by BlackRock, not all financial analysts are optimistic. Last week, analysts called the recent surge in cryptocurrency prices “exaggerated.” According to them, the approval of cryptocurrency ETFs would only redistribute existing capital rather than attract new investments into the sector.
Additionally, Fidelity Investments is also waiting in the wings with a pending application for a Bitcoin fund.
The interest of major financial institutions such as BlackRock and Fidelity in cryptocurrency investment funds demonstrates a changing trend in investment strategies and highlights the growing importance of digital assets in traditional finance. As regulatory clarity improves and traditional financial entities continue to enter the cryptocurrency space, market participants will closely monitor new developments that could shape the landscape of crypto-related investment products. digital currencies.
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