The Securities and Exchange Commission's (SEC) Crypto Task Force recently conducted separate meetings with BlackRock and the Crypto Council for Innovation's (CCI) Proof of Stake Alliance to examine regulatory frameworks for cryptocurrency exchange-traded products (ETPs).
During the April 1 meeting, BlackRock's senior representatives from regulatory affairs, product engineering, and ETF capital markets presented existing workflows and discussed how these systems could adapt to potential in-kind models for future crypto-based funds.
In a separate session, the SEC met with members of the Proof of Stake Alliance, including representatives from a16z, Paradigm, Consensys, and other prominent firms. The discussion centered on various staking models, including liquid, custodial, and delegated non-custodial staking approaches.
The meetings build upon earlier discussions from February, where the SEC's Crypto Task Force evaluated the possibility of including staking within crypto ETPs. During those talks, industry leaders argued that staking plays a fundamental role in proof-of-stake blockchains like Ethereum and Solana.
Two proposed models emerged from the February discussions: a "Services Model" enabling partial staking through third-party validators while maintaining liquidity, and a "Liquid Staking Token Model" allowing ETPs to hold liquid staking tokens.
While the SEC has not announced any regulatory decisions, these ongoing discussions reflect growing institutional interest in developing clear guidelines for cryptocurrency financial products. The meetings mark another step in the SEC's comprehensive review process as it evaluates both technical and legal aspects of crypto ETPs.
The engagement between regulators and industry leaders highlights the complex considerations surrounding the integration of staking rewards, validator responsibilities, and service provider relationships into potential staking-enabled crypto ETPs.