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BlackRock has announced that there is no legal reason to treat spot crypto ETFs and crypto futures ETFs differently, according to the US Securities and Exchange Commission (SEC). The iShares Ethereum Trust, a spot Ethereum ETF plan offered by BlackRock, was officially approved on November 9th after Nasdaq submitted the 19b-4 application form to the SEC on behalf of the company.
Spot ETF Products Should Be Approved
In the application submitted by BlackRock, SEC officials questioned their behavior towards spot crypto asset ETF products and argued that the institution’s continuous rejection of these applications was due to the legal regulatory distinctions between futures and spot ETF products:
“Considering that the Commission has approved ETFs that offer profit opportunities through ETH futures and that these are priced according to the spot ETH market, the Commission believes that it should also approve ETFs that enable investment in spot ETH.”
SEC has not yet given the green light to any spot crypto ETF applications but has approved a series of crypto futures ETF applications. According to the securities regulator, this situation is due to the superior regulation or consumer protections provided by the 1940 Act, which covers crypto futures ETF products, as opposed to the 1933 Act, which covers spot crypto ETF products.
How is the Process Being Evaluated?
Additionally, it seems that SEC prefers legal regulation and oversight sharing agreements in the crypto asset futures trading market of the Chicago Mercantile Exchange (CME) during this process. However, BlackRock argues that SEC officials’ preference for the 1940 Act is not important in this field because it imposes certain restrictions on ETF products and ETF service providers:
“None of these restrictions specifically address the markets from which an ETF product’s underlying assets, whether they are ETH futures or spot ETH, are derived, be it the CME ETH futures market or the spot ETH markets. As a result, corporate entities believe that the distinction between the registration of ETH futures ETF products under the 1940 Act and the registration of spot ETH ETPs under the 1933 Act is indistinguishable in the context of ETH-based ETP offerings.”
