During this period, BlackRock was deeply involved in working with the SEC Crypto Task Force to promote the approval of crypto Exchange Traded Products (ETPs) and tokenization. They provided profound guidance on technical aspects, current workflows, and integrating staking functionalities in ETPs. The conversations follow up on an earlier session from April 1. They are a sign of BlackRock’s increasingly active engagement with the SEC on policy matters around crypto. BlackRock’s proposal is consistent with other recent related industry proposals under consideration by the SEC.
ETP Structure and Redemption Models
BlackRock discussed the technical aspects of in-kind redemptions for crypto ETPs, providing a comprehensive document outlining existing workflows under the current cash model. This detailed overview aimed to provide the SEC with a clear understanding of the operational mechanics involved in crypto ETPs.
BlackRock decidedly focused on the criteria listed in Section 6(b) of the Exchange Act. They explored how these benchmarks can be used to assess whether or not a crypto ETP is eligible for exchange listing by satisfying the necessary regulatory criteria.
Staking and Regulatory Alignment
One of the main topics of conversation was how and if staking features could be integrated into ETPs. BlackRock went on to describe its preferred approaches for designing proof-of-stake asset exposure into ETPs. The firm’s goal is to meet emerging regulatory expectations while managing for liquidity and achieving robust investor protections.
As regulation has come to crypto, staking has become a pivotal topic in the addressable market’s continuing discussion over ETPs’ proof-of-stake asset exposure. BlackRock’s complex treatment of staking in ETPs is a big signal they’re trying to comply with regulatory expectations.
Ongoing Engagement
BlackRock has been in direct contact with the SEC over crypto policy issues. The firm’s forward-leaning approach to these discussions shows its focus on helping clients navigate the developing regulatory landscape for digital assets.
BlackRock, of course, plans to work with regulators on all of this. Their goal is to encourage innovation and ensure responsible growth in the crypto space. BlackRock's discussions with the SEC are ongoing.
