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- BlackRock discusses staking in crypto ETPs with the SEC to boost institutional interest in digital assets.
- SEC’s approval of staking for Ether ETFs could pave the way for other altcoin investments.
- Tokenization of traditional securities could streamline transactions and enable 24-hour markets.
BlackRock, the biggest investment manager, met recently with the Securities and Exchange Commission’s (SEC) Crypto Task Force to discuss the progress of the cryptocurrency market. The discussions were concerned with staking’s integration with crypto ETPs and the viability of traditional securities. If successful, these initiatives may have a meaningful effect on increasing institutional interest in crypto investment.
As per a May 9 memo by the task force, one of the key issues under discussion at the meeting was the inclusion of staking in crypto ETPs. Staking, where users lock up digital assets and receive rewards in return, is one of the appealing features that BlackRock identifies in Ether exchange-traded funds (ETFs). The firm has previously said that although Ether ETFs are successful, they are not yet optimized fully without staking capabilities. This will boost more institutional intervention in crypto markets.
Staking and Crypto ETFs
Other crypto ETF issuers share BlackRock’s opinion about the importance of staking. On February 15, the New York Stock Exchange proposed a rule change that would allow staking for Grayscale’s spot Ether ETFs. The SEC has not yet made the final decision about the rule change. According to Sosovalue, BlackRock and Grayscale oversee some of the largest Ether ETFs in terms of market capitalization.
Source: Sosovalue
Staking is of special interest for blockchains that use a proof-of-stake consensus mechanism. This system ensures that users can lock their tokens in return for yield which is appealing to investors. The SEC’s willingness to approve staking for Ether ETFs may lead to similar offerings for other altcoins, including Solana, which may increase the involvement of institutions in the crypto market.
BlackRock’s BUIDL Fund
Apart from staking, BlackRock also discussed about tokenizing of traditional securities. Tokenization of securities including stocks and bonds has numerous benefits such as efficient settlement times and less transaction costs. It also brings a possibility for 24 hour markets. BlackRock also has the BUIDL fund, which tokenizes US federal debt and currently has a market cap of $2.9 billion.
Other companies are also venturing into the tokenization of securities. Robinhood is focusing on developing a blockchain to enable European retail investors to trade U.S. stocks. This initiative is consistent with BlackRock’s initiative to close the gap between traditional finance and digital assets.
