Wall Street behemoth BlackRock convened with the Securities and Exchange Commission (SEC) Crypto Task Force to deliberate on staking within cryptocurrency exchange-traded products (ETPs) and the tokenization of securities. This dialogue could enhance institutional engagement in the cryptocurrency sector.
As per a May 9 memorandum released by the task force, BlackRock aimed to “[d]iscuss viewpoints on the treatment of staking, comprising considerations for enabling ETPs with staking functionalities.” The firm has previously remarked that Ether (ETH) exchange-traded funds, while successful, are not as optimal without staking.
Other cryptocurrency ETF issuers hold a similar opinion. On Feb. 15, the New York Stock Exchange put forth a proposal for a rule amendment to incorporate staking services for Grayscale’s spot Ether ETFs. In April, the SEC postponed a decision on whether to approve or reject the rule amendment. BlackRock and Grayscale lead in managing the largest Ether ETFs by market capitalization, according to Sosovalue.
Numerous blockchains depend on proof-of-stake consensus models that enable users to lock their native currencies for rewards. A likely SEC approval of staking for Ether ETFs might spur future requests among alternative coins, including Solana (SOL) ETFs.
Tokenization on the agenda
BlackRock also addressed the “tokenization of securities within the federal securities regulatory framework.” Securities are conventional financial assets where investors anticipate financial returns, such as bonds and stocks. Tokenizing securities offers several advantages, including quicker settlement times, reduced costs compared to traditional financial infrastructure, and round-the-clock markets.
BlackRock already provides a US federal debt tokenized fund named BUIDL, the largest fund with a market valuation of $2.9 billion. Competing options include Franklin Templeton’s BENJI fund.
Brokerage firm Robinhood is also investigating the tokenization of securities. The company is reportedly developing a blockchain that would permit retail investors in Europe to trade US securities like stocks.
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