BlackRock Challenges SEC's Differential Treatment of Crypto ETFs

By: Eva Baxter

Investment management firm BlackRock has argued that the U.S. Securities and Exchange Commission (SEC) has no valid reason to treat spot-crypto and crypto-futures exchange-traded fund applications differently. BlackRock's plan for a spot-Ether (ETH) ETF called 'iShares Ethereum Trust' was officially confirmed recently. This statement was made as part of the firm's recent application

The SEC has not yet approved any spot-crypto ETF application, but has approved several crypto futures ETFs, citing supposedly superior regulation/consumer protections under the 1940 Act which oversee these ETFs, as opposed to the 1933 Act that covers spot-crypto ETFs. BlackRock, however, has disputed this preference indicating that the 1940 Act restrictions affect ETFs and sponsors, but not the underlying assets of the ETFs.

As BlackRock puts it, the distinction between registration of ETH futures ETFs under the 1940 Act and the registration of spot ETH ETPs under the 1933 Act has no significant difference in the context of ETH-based ETP proposals. Therefore, SEC's reasons to reject the application lack validity. Crypto and ETF analysts also predict that the first SEC approval of a spot crypto ETF, particularly one related to Bitcoin, is imminent, with a 90% chance of approval before Jan. 10 next year.