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BlackRock Questions SEC’s Differential Treatment of Spot ETFs

BlackRock Challenges SEC’s Logic Regarding Spot ETFs:

  • BlackRock disputes the SEC’s differential treatment of cryptocurrency Futures ETFs and spot ETFs.

  • BlackRock argues that Futures ETFs indirectly rely on spot cryptocurrency prices.
  • The SEC justifies its stance with stricter regulations on Futures ETFs under the 1940 Act.

BlackRock, a giant in the asset management world, has recently shed light on an inconsistency in the Securities and Exchange Commission’s (SEC) approach to handling Bitcoin and Ethereum SPOT ETFs.

BlackRock has just submitted an application for a SPOT Ethereum (ETH) ETF called ‘iShares Ethereum Trust.’ Alongside its submission, the American giant has criticized the SEC for what it sees as a lack of valid reasons to treat Futures ETFs differently from spot ETFs.

Given that the Commission has approved ETFs offering exposure to ETH futures contracts, which themselves are based on the underlying ETH spot market, the sponsor believes that the Commission should also approve ETFs offering exposure to spot ETH

stated BlackRock

Therefore, it seems illogical to BlackRock not to approve ETFs that offer direct exposure to spot cryptocurrencies.

A Response from the SEC Regarding This ‘Inconsistency’

The SEC justifies this by stating that Futures ETFs operate under a much more robust regulatory framework under the 1940 Act, as opposed to the 1933 Act that governs spot ETFs.

However, BlackRock contests this information, arguing that the restrictions imposed by the 1940 Act do not apply to the underlying assets of the ETFs, whether they are Futures or spot cryptocurrencies.

Ultimately, BlackRock challenges the SEC’s regulatory logic, sparking a crucial debate on fairness and consistency in the regulation of financial products tied to cryptocurrencies.

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