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3 Stocks to Watch as SEC Goes Public on Crypto ETF Applications

On Nov 30, in what can be dubbed as a watershed moment for the crypto market, the United States Securities and Exchange Commission (“SEC”) called for public opinion on a proposed rule change that will allow Fidelity Investments, an asset management giant, to list and trade shares of the Fidelity Ethereum Fund.

The announcement invites “interested persons” to share their views on Fidelity’s proposal. Fidelity applied for a spot Ethereum (ETH) ETF on Nov 17, seeking to list and trade shares of its Fidelity Ethereum Fund on the Cboe BZX Exchange.

Per Fidelity’s filing, "The lack of an exchange-traded product (“ETP”) that holds spot ETH exposes U.S. investor assets to significant risk because investors that would otherwise seek crypto asset exposure through a Spot ETH ETP are forced to find alternative exposure through generally riskier means”. And it is for the creation of this ETP that the SEC needs to change its rules if it is serious in its bid to bring crypto mainstream. On current evidence, it seems the regulatory body is shifting from its stance of stalling these pending approvals.

This has opened up opportunities for various traditional finance giants who have applied for a spot in crypto ETFs. Bitcoin has rallied in recent sessions and breached the $38,000 mark following the optimism over this possibility. Ethereum has gone up close to 3% in the last 24 hours following this news.

Investor optimism is currently on a very high level as it is increasingly becoming clear that the regulatory body might stop stalling these applications and pave the way for crypto to go mainstream. Thus, one must track some of the major spot crypto ETF applicants at this current juncture to understand the impact this news might have on them. These are some of the biggest names in the traditional marketplace that have decided to explore the crypto space in recent months.

BlackRock, Inc. BLK: This enterprise risk management and fixed-income institutional asset manager applied to launch a crypto exchange-traded fund in June. BlackRock is the world’s largest asset manager. BlackRock’s expected earnings growth rate for the current year is 3.1%. BLK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Invesco Ltd. IVZ: This investment management company had first filed for a Bitcoin ETF in 2021 but dropped it in October of the same year. However, in June of 2023, it joined the race to be the first investment industry giant to launch a Bitcoin ETF. Invesco’s expected earnings growth rate for the current year is -15.5%. However, it is projected to grow at a rate of 12.6% in 2024. IVZ currently carries a Zacks Rank #4 (Sell).

WisdomTree, Inc. WT:This ETF sponsor and asset manager also joined the crypto ETF race by applying for one in June 2023. WisdomTree’s expected earnings growth rate for the current year is 38.5%. WT currently carries a Zacks Rank #4.

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