The US Securities and Exchange Commission’s (SEC) Crypto Task Force recently met separately with representatives from BlackRock and the Crypto Council for Innovation’s (CCI) Proof of Stake Alliance to discuss regulatory issues related to crypto exchange-traded products (ETPs). BlackRock discussed in-kind redemptions for crypto ETPs traded in the US, while the CCI focused on staking on ETPs during their respective meetings with the regulator. The discussions aimed to address changes and advancements in crypto ETPs.
BlackRock’s representatives, including senior members from various departments, presented existing workflows and market participants’ roles in the cash model used in ETPs during their session with the Crypto Task Force. The firm also outlined potential in-kind models for future crypto-based funds. Additionally, the SEC met with members of the Proof of Stake Alliance, who discussed staking-related topics and their implications for crypto ETPs, including different staking models and industry principles.
The SEC’s engagement with BlackRock and the Proof of Stake Alliance highlights continued institutional interest in advancing regulatory clarity for crypto financial products. Earlier meetings with Jito Labs and Multicoin Capital discussed the potential inclusion of staking within crypto ETPs. Participants argued that staking is crucial for proof-of-stake blockchains like Ethereum and Solana, and excluding it could negatively impact investor returns and asset utility. Proposed models, such as the Services Model and Liquid Staking Token Model, were presented to address these concerns.
While no specific regulatory outcomes were disclosed from these recent meetings, they form part of the SEC’s ongoing review process regarding crypto ETPs. The agency aims to evaluate technical and legal frameworks to ensure appropriate regulation and oversight of these financial products. The continued dialogue with industry participants and stakeholders underscores the importance of regulatory clarity and innovation in the evolving crypto market landscape.
Overall, the discussions between the SEC, BlackRock, and the Proof of Stake Alliance reflect the growing interest and engagement of institutional players in shaping the regulatory framework for crypto ETPs. With ongoing advancements in technology and market dynamics, it is essential for regulators to work collaboratively with industry experts to ensure a balanced and informed approach to overseeing crypto financial products. By addressing key issues such as staking and in-kind redemptions, regulators can support the growth and maturity of the crypto ETP market while safeguarding investor interests and market integrity.
