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BlackRock Challenges SEC's Differential Treatment of Crypto ETFs

Published: Nov 11, 2023 | Last Updated: Nov 11, 2023
Howard Kane

World's largest asset manager argues for equal regulation of spot-crypto and crypto-futures ETFs, potentially paving the way for approval of first spot-crypto ETF

BlackRock, the world's largest asset manager, has taken a stance against the U.S. Securities and Exchange Commission's (SEC) differential treatment of spot-crypto and crypto-futures exchange-traded fund (ETF) applications. The firm argues that both types of investments should be subject to the same regulatory framework.

BlackRock's Argument

BlackRock's argument centers around the SEC's preference for the 1940 Act, which oversees futures ETFs, over the 1933 Act, which governs spot ETFs. The asset manager asserts that this preference lacks relevance in the context of cryptocurrency investments. BlackRock believes that the SEC's current line of thinking does not provide a justifiable reason to reject their spot-Ether ETF application.

The company further argues that the underlying assets of both futures and spot ETFs are the same, and therefore should be treated equally. This argument challenges the SEC's current practice of approving several crypto futures ETFs while yet to approve a single spot-crypto ETF application.

Implications for Future Regulation

BlackRock's stance could have significant implications for the future regulation of cryptocurrency investments. If the SEC were to agree with BlackRock's argument, it could pave the way for the approval of the first spot-crypto ETF. This would mark a significant milestone in the integration of cryptocurrencies into mainstream investment portfolios.

Analysts' Predictions

Despite the current regulatory landscape, analysts predict that the SEC's approval of a spot crypto ETF is likely to happen soon. Such an event would not only validate BlackRock's argument but also potentially lead to a surge in cryptocurrency investments, given the ease of access and liquidity that ETFs offer to investors.

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