rewrite this title BlackRock meets SEC Crypto Task Force to discuss tokenization, ETP rules

BlackRock representatives met with the US Securities and Exchange Commission’s (SEC) Crypto Task Force on May 9 to seek guidance on a range of crypto regulatory issues, including tokenization, staking, and approval frameworks for exchange-traded products (ETPs).

According to the meeting memo, BlackRock reviewed its digital asset offerings, including the iShares Bitcoin Trust (IBIT), the proposed iShares Ethereum Trust (ETHA), and the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).

The firm used the opportunity to solicit input on how current and future products might be regulated under federal securities laws, particularly as the digital asset market matures.

The meeting included senior representatives from regulatory affairs, legal, digital assets, and ETF markets. Following a prior session on April 1, BlackRock continues directly engaging with the SEC on crypto policy matters.

Last month, the firm discussed technical elements of in-kind redemptions for crypto ETPs and shared a detailed document on existing workflows under the current cash model. 

Additionally, the firm outlined how those systems might adapt to support alternative models for crypto-based funds.

Product scope and regulatory ambitions

BlackRock also outlined its views on incorporating staking features into ETPs, aligning with other recent industry proposals reviewed by the SEC. 

Staking has become a central issue in ongoing discussions over whether proof-of-stake asset exposure within ETPs can be designed to meet regulatory expectations without compromising liquidity or investor protections.

The meeting also addressed tokenization, with BlackRock requesting feedback on how tokenization efforts could be structured within the existing securities framework. Tokenization is the process of representing traditional assets in the blockchain as digital tokens. 

The firm also suggested interim standards for crypto ETP issuers, asking the SEC to consider codified guidance that might apply ahead of broader rulemaking.

BlackRock additionally discussed criteria under Section 6(b) of the Exchange Act that could be used to evaluate whether a crypto ETP satisfies regulatory thresholds for exchange listing. These criteria include assessments of market integrity and investor safeguards.

Lastly, the meeting with the SEC Crypto Task Force covered options on crypto ETPs, with BlackRock raising technical questions about position and exercise limits. The firm requested clarity on how such limits could be structured regarding liquidity thresholds for the underlying crypto or ETP shares.

Mentioned in this article