tl;dr
The US Securities and Exchange Commission's (SEC) Crypto Task Force held meetings with BlackRock and the Crypto Council for Innovation's Proof of Stake Alliance to discuss regulatory issues related to crypto exchange-traded products (ETPs). BlackRock discussed in-kind redemptions for crypto ETPs, wh...
The US Securities and Exchange Commission's (SEC) Crypto Task Force recently held meetings with BlackRock and the Crypto Council for Innovation's Proof of Stake Alliance to discuss regulatory issues related to crypto exchange-traded products (ETPs). During these discussions, BlackRock delved into in-kind redemptions for crypto ETPs, while the CCI explored staking on ETPs and its potential impact. The engagements highlight the institutional interest in advancing regulatory clarity for crypto financial products, signaling ongoing efforts to evaluate technical and legal frameworks regarding crypto ETPs.
BlackRock's involvement in the meetings included senior representatives from regulatory affairs, product engineering, ETF capital markets, and federal policy. They presented existing workflows and the role of market participants supporting the cash model used in ETPs, addressing how these systems could apply to potential in-kind models for future crypto-based funds.
Separately, the SEC met with the Proof of Stake Alliance under the Crypto Council for Innovation, discussing various staking models, including liquid, custodial, and delegated non-custodial staking. Participants also outlined staking-as-a-service industry principles, focusing on validator operations and user participation in proof-of-stake networks. The implications of staking rewards, validator responsibilities, and service provider relationships on the risk profile and valuation of potential staking-enabled crypto ETPs were also explored.
These discussions build upon earlier meetings where the SEC’s Crypto Task Force engaged with representatives from Jito Labs and Multicoin Capital to assess the potential inclusion of staking within crypto ETPs. The participants contended that staking is vital to proof-of-stake (PoS) blockchains and proposed models to address the SEC’s concerns. While no regulatory outcomes were disclosed, the meetings form part of the SEC’s ongoing review process as it evaluates technical and legal frameworks regarding crypto ETPs.