SEC Stunned As BlackRock Attempts To Invent Crypto Square Peg For Round ETF Hole!

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Somewhere in the mystical land of American investing, right between the Mountains of Endless Acronyms and the Swamp of Excruciating Paperwork, sits BlackRock, a financial wizard of considerable repute. Their latest epic quest? Filing a scroll—sorry, a “proposal”—to the US Securities and Exchange Commission (a dragon that guards the gates of Finance Mountain) for the in-kind creation and redemption of the iShares Ethereum Trust ETF (ETHA). If you think that sounds suspiciously magical, that’s because it is. This comes just three months after they tried to pull a similar rabbit (or perhaps a Satoshi) from the hat with a Bitcoin ETF. Some wizards never tire, especially if there’s gold—or Ethereum—involved.

BlackRock Slips SEC a Crypto Note: “Fancy a Spot ETF Tango?”

On May 9, BlackRock filed what is known as an amendment to the S-1 form, which is investment speak for “If at first you don’t succeed, file, file again.” The amendment proposes the use of in-kind creation/redemption for their sparkly Ethereum fund.

Before anyone fetches the Holy Hand Grenade of Confusion, here’s what usually happens: crypto spot ETFs trade cash for shares and, when you’re done, you cash out. Simple. If you’re the sort who doorsteps the bank teller with a bag of coins, you’ll understand.

But in the interest of causing mild headaches among accountants, BlackRock proposes an “in-kind” method, where brave souls swap shiny shares directly for cryptocurrency—no cash required. This miraculous system lets BlackRock hoard even more Ethereum, presumably to do battle against the Citadel of Regulation someday.

According to Bloomberg’s James Seyffart (who spends his days watching filing cabinets more closely than most people watch cat videos), this is the first attempt at such a high-wire crypto act for Ethereum ETFs—preceded by a similar escapade for Bitcoin earlier this year. The final word from the regulatory oracles arrives around November 10, 2025, giving us all plenty of time to practice our “I told you so” faces.

Related Reading: What’s Floating The Bitcoin Price Above $100,000 This Time—Witchcraft or Just More FOMO?

The Perilous Perils Of In-Kind Creation/Redemption (And Quantum Surprises!)

Anytime someone uses the phrase “in-kind redemption system,” you know there’s a catch—or twelve. BlackRock, ever the polite necromancer, lists these in their S-1 spellbook (disclosure document). If you’re thinking it’s all just the usual monsters under the crypto bed, you’re mostly correct.

But wait! Seyffart points out a delightful doomsday paragraph about Quantum computing. Quantum computers, those not-yet-built magic boxes, might someday chew through cryptographic spells keeping Bitcoin and Ethereum safe, like termites through Discworld library files. BlackRock (wisely) notes such an event could make your precious coins as secure as a paper umbrella in a hurricane.

Yes, there are lofty plans for “Quantum-proof” magic runes, though, in true wizard fashion, no one has quite worked out how to cast them without causing all sorts of network explosions, splits, or your coins turning into cabbages.

Still, Seyffart reassures us not to panic, as these arcane worries come standard with the “Digital Asset: Handle With Extreme Skepticism” label. Other jolly hazards include the chance your chosen exchange collapses with all the grace of a drunken troll (looking at you, FTX), unpredictable rules, and the sort of volatility that makes a Discworld street market look organized.

As this is all being written, Ethereum’s currently strutting about at $2,347, after a week that saw it leap 28.38%—always the show-off. On a monthly chart, it’s up 48.38%, proving that at least some coins believe in magic, or possibly really cheap electricity.


Featured image by Reuters, chart by Tradingview, all chaos and commentary courtesy of BlackRock’s persistent paperwork.

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2025-05-10 22:26