BlackRock recently questioned the U.S. Securities and Exchange Commission (SEC), arguing that there is no reasonable basis for the SEC to treat "spot cryptocurrency ETFs" and "cryptocurrency futures ETFs" differently. BlackRock noted that while the SEC has not approved any applications for spot cryptocurrency ETFs, it has approved a number of cryptocurrency futures ETFs. The SEC said this is because cryptocurrency futures ETFs have better regulatory and consumer protections under the 1940 Act than spot cryptocurrency ETFs under the 1933 Act.
I took Scott's advice and read Blackrock's argument for approval of a spot ETH ETF.
It's very compelling.
The argument flows from Grayscale's DC Circuit victory: the SEC can't lawfully approve ETH futures ETFs but not a spot ETH ETF. I agree.
Read here: https://t.co/7mwYNWDHRo https://t.co/fAgVBnOBZZ
— Jake Chervinsky (@jchervinsky) November 10, 2023
BlackRock questions SEC's reasons for rejecting application
In addition, BlackRock plans to launch a spot Ethereum (ETH) ETF called "iShares Ethereum Trust" and has submitted a 19b-4 application form to the SEC on November 9 by a representative of Nasdaq.
In its filing, BlackRock questioned the SEC’s treatment of spot cryptocurrency ETFs, arguing that the SEC’s continued rejection of these applications is based on a mistaken regulatory distinction between futures and spot ETFs.
(iShares Ethereum Trust: Six major institutions are rushing to attack the Ethereum spot ETF! BlackRock joins the battle, ETH breaks through 2100)
BlackRock argued that since the SEC has approved a cryptocurrency futures ETF through the Chicago Mercantile Exchange (CME), this indicates that the SEC believes that CME’s supervision can detect spot market fraud affecting spot ETPs. Therefore, in BlackRock's view, this leaves the SEC with no reasonable basis to deny the application based on current logic.
SEC theory is far-fetched
BlackRock further pointed out that the SEC's preference for the 1940 Act as an explanation is somewhat far-fetched, because the act sets "certain restrictions" on "ETFs" and "ETF issuers," rather than the underlying assets of the ETF.
BlackRock believes there is no difference between registering an Ether futures ETF under the 1940 Act and registering a spot Ethereum ETP under the 1933 Act in the context of the Ethereum-based ETP proposal.
Cryptocurrency and ETF analysts generally believe that SEC approval of the first spot cryptocurrency ETF (Bitcoin ETF) is imminent. Bloomberg ETF analysts James Seyffart and Eric Balchunas predict there is a 90% chance of such approval happening before January 10 next year.
This article BlackRock questions SEC: No reason not to pass cryptocurrency spot ETF appeared first on Chain News ABMedia.
