BlackRock (NYSE:BLK), the globe’s premier asset manager with an impressive $8 trillion portfolio, is taking the lead in dialogues with the U.S. Securities and Exchange Commission (SEC). The aim is to achieve a uniform regulatory approach for Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) in the spot market.
The firm is pushing for the same regulatory treatment as futures ETFs, underscoring the parallel dependence of both kinds of investment mechanisms on spot markets.
In fact, BlackRock has recently taken steps indicating its readiness for potential applications for spot ETFs. These steps include the establishment of an iShares Ethereum Trust in Delaware.
The firm has openly expressed its viewpoint on the Commission’s interpretation of the Investment Company Act of 1940- a U.S. federal law that sets regulations for mutual funds and closed-end investment businesses to protect investors. It mandates disclosure, limits conflicts of interest, and ensures sound structure and operations. BlackRock argues that the Act does not adequately address potential fraud risks tied to cryptocurrency markets, which could affect the assets of ETFs.
In spite of these regulatory hurdles, BlackRock remains hopeful about the possibility of launching its spot Bitcoin ETF by January 2024. Should this be approved, it could have a substantial influence on the market, with an estimated influx of up to $200 billion into Bitcoin. The SEC is projected to deliver decisions on several ETF applications by November 17th.
Yassin Mubarak from Dizer Capital has expressed his concerns about the lack of an ETF for XRP, despite its legal status being clearly defined after Ripple’s triumph in a lawsuit against the SEC. The legal clarity has not resulted in an ETF offering for XRP, which currently holds the position as the fifth-largest cryptocurrency worldwide. This market gap remains, even as companies like BlackRock display significant interest in crypto ETFs.
As major firms like BlackRock navigate the ever-changing terrain of cryptocurrency investments and regulations, industry observers are keenly watching to see how these developments might alter access to digital assets via regulated financial products such as ETFs.
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