BlackRock Engages with SEC Crypto Task Force to Discuss Tokenization and ETP Regulations

BlackRock officials convened with the US Securities and Exchange Commission’s (SEC) Crypto Task Force on May 9 to gather insights on various regulatory matters pertaining to cryptocurrencies, touching on topics like tokenization, staking, and the regulatory frameworks for exchange-traded products (ETPs).

During the discussions, BlackRock provided an overview of its digital asset initiatives, which include the iShares Bitcoin Trust (IBIT), the proposed iShares Ethereum Trust (ETHA), and the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).

The firm leveraged this meeting to seek advice on how both current and upcoming products may fall under existing federal securities regulations, especially in light of the evolving digital asset landscape.

Representatives from regulatory affairs, legal, digital assets, and ETF markets participated in the session. Following a previous engagement on April 1, BlackRock continues to actively collaborate with the SEC on crypto policy.

In the previous month, the firm delved into the technical aspects of in-kind redemptions for crypto ETPs and provided a comprehensive document detailing existing workflows based on the current cash model.

Moreover, BlackRock discussed potential adaptations of these systems to facilitate alternative frameworks for crypto-focused funds.

### Product Scope and Regulatory Ambitions

BlackRock articulated its perspectives on integrating staking functionalities into ETPs, aligning its ideas with recent industry proposals under SEC review.

Staking has emerged as a key focal point in the ongoing dialogue regarding the design of ETPs that include proof-of-stake assets, aiming to fulfill regulatory requirements while ensuring liquidity and safeguarding investors.

The conversation also encompassed tokenization, with BlackRock asking for insights on how to effectively incorporate tokenization initiatives within the current securities regulatory framework. Tokenization refers to the representation of traditional assets as digital tokens on a blockchain.

Additionally, the firm proposed interim standards for crypto ETP issuers, urging the SEC to think about implementing formalized guidance that could take effect before more extensive rulemaking occurs.

BlackRock further explored criteria under Section 6(b) of the Exchange Act, which could help ascertain whether a crypto ETP meets regulatory criteria for exchange listing. This includes evaluations of market integrity and protections for investors.

Finally, discussions with the SEC Crypto Task Force also touched on options related to crypto ETPs, prompting BlackRock to pose technical inquiries regarding position and exercise limits. The firm sought clarity on how these limits could be defined in relation to liquidity thresholds tied to the underlying cryptocurrencies or ETP shares.