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BlackRock Challenges SEC's Approach to Crypto ETFs

BlackRock, a global investment management corporation, has recently made a compelling argument against the U.S. Securities and Exchange Commission's (SEC) treatment of cryptocurrency exchange-traded funds (ETFs). The firm questions the SEC's rationale in differentiating between crypto futures ETFs and spot-crypto ETFs.

Push for Spot-Ether ETF

BlackRock's pursuit of launching a spot-Ether (ETH) ETF, named "iShares Ethereum Trust," highlights the firm's commitment to crypto integration in mainstream finance. The submission of the 19b-4 application form to the SEC marks a significant step towards this goal.

The Core Argument

The essence of BlackRock's argument is that the SEC's approval of ETFs providing exposure to ETH futures, which are priced on the underlying spot ETH market, should logically extend to ETPs (Exchange Traded Products) that offer direct exposure to spot ETH.

SEC's Stance and BlackRock's Counter

While the SEC has greenlit multiple crypto futures ETFs, it remains hesitant on spot-crypto ETFs, citing regulatory and consumer protection concerns under different legislative acts. However, BlackRock counters this by noting that the distinctions in these acts do not meaningfully differentiate between the assets underlying these ETFs, be they ETH futures or spot ETH.

Implications and Predictions

BlackRock's stance suggests that the SEC's approval of crypto futures ETFs via the Chicago Mercantile Exchange (CME) implies an ability to detect and address fraud in the spot market. This logic challenges the SEC's current hesitation. Meanwhile, analysts anticipate the likelihood of the SEC approving a spot crypto ETF, potentially a Bitcoin-related one, with Bloomberg analysts predicting a high chance of such an approval in the near future.