According to Cointelegraph, BlackRock has argued that the U.S. Securities and Exchange Commission (SEC) has no legitimate reason to treat crypto futures exchange-traded funds (ETFs) differently from spot-crypto ETFs. The firm's plan for a spot-Ether (ETH) ETF, called the 'iShares Ethereum Trust,' was officially confirmed on Nov. 9 after Nasdaq submitted the 19b-4 application form to the SEC on BlackRock's behalf. In its application, BlackRock questioned the SEC's treatment of spot crypto ETFs, asserting that the agency based its justifications for continually denying these applications on incorrect distinctions between futures and spot ETFs.
The SEC has yet to approve a single spot-crypto ETF application but has approved several crypto futures ETFs. The securities regulator has indicated that this is due to crypto futures ETFs having supposedly superior regulation and consumer protections under the 1940 Act as opposed to the 1933 Act for spot crypto ETFs. Additionally, the SEC also appears to favor the regulation and surveillance-sharing agreements over the Chicago Mercantile Exchange's (CME's) digital asset futures market. However, BlackRock argues that the SEC's preference for the 1940 Act lacks relevance in this area, as the Act places 'certain restrictions on ETFs and ETF sponsors' and not the underlying assets of the ETFs.
BlackRock outlined that as the SEC has approved crypto futures ETFs via the CME, it has 'clearly determined that CME surveillance can detect spot-market fraud that would affect spot ETPs.' As such, in the firm's eyes, it essentially leaves the SEC with no justifiable reason to reject the application under its current line of thinking. It is generally thought among crypto and ETF analysts that the first SEC approval of a spot crypto ETF, in the form of a Bitcoin-related one, is only around the corner. Bloomberg ETF analysts James Seyffart and Eric Balchunas predict a 90% chance of approval sometime before Jan. 10 next year.
