Not long after the launch of BlackRock’s bitcoin exchange-traded fund (ETF), the asset manager’s CEO Larry Fink has begun the process of promoting a second ETF product with Ethereum as the underlying cryptocurrency, citing the transformative utility of its blockchain.
The Wall Street scene is hungry for more, and promoting additional crypto ETFs is a logical move, especially considering the attention the bitcoin product has received. This means numerous salespeople will be conducting meetings to introduce the new product and explain its features in an effort to attract buyers.
Selling an ether (ETH) ETF, however, may present a challenge to issuers. Investors who have recently purchased a bitcoin ETF may already feel that their portfolios are diversified enough. This raises the question of the need for another crypto diversification tool.
Sui Chung, CEO of CF Benchmarks, has been contemplating this, having recently published a guide explaining the advantages of a bitcoin-backed security to investors. While defining bitcoin technology and its potential application to finance is part of the explanation, Chung believes that the primary focus should be on the bitcoin ETF’s investment role, as a small allocation aids portfolio diversification and overall risk-adjusted return enhancement.
Chung further emphasized that mainstream financial institutions must consider how to market an ETH ETF to traditional finance investors who have already diversified their portfolios with bitcoin. Explaining concepts like tokenization, smart contracts, decentralized finance (DeFi), and blockchain staking, while addressing the SEC’s perspective on these, is crucial for educating investors about Ethereum.
One of the key differences between Bitcoin and Ethereum is the move of the latter away from the energy-intensive proof-of-work security system to a more environmentally friendly validator model. However, the marketing of an Ethereum ETF should not be centered around environmental, social, and governance (ESG) issues due to the controversy surrounding ESG investing.
It is important to note that BlackRock declined to provide a comment on this matter.
