BlackRock has challenged the reasoning behind the U.S. Securities and Exchange Commission’s (SEC) different treatment of crypto futures ETFs compared to spot-crypto ETFs, claiming there’s no valid basis for this disparity.
Recently, BlackRock’s ambition to launch a spot-Ether (ETH) ETF, named the “iShares Ethereum Trust,” moved forward. This development followed Nasdaq’s submission of the 19b-4 application form to the SEC on BlackRock’s behalf on November 9.
In this application, BlackRock questioned the SEC’s approach to spot crypto ETFs. They argued that the SEC’s repeated rejections of these applications are founded on erroneous distinctions between futures and spot ETFs.
While the SEC has not yet approved any spot-crypto ETF applications, it has authorized several crypto futures ETFs. The SEC justifies this by claiming that crypto futures ETFs are better regulated and offer more consumer protections under the 1940 Act, compared to the 1933 Act which governs spot crypto ETFs.
The SEC also seems to prefer the regulatory framework and the surveillance-sharing agreements of the Chicago Mercantile Exchange’s (CME) digital asset futures market.
However, BlackRock contends that the SEC’s preference for the 1940 Act is irrelevant in this context. They argue that the Act imposes restrictions on ETFs and their sponsors, rather than on the ETFs’ underlying assets.