BlackRock submits revised versions of ETHA and IBIT ETFs after a meeting with the SEC, marking a new step forward in the progress of their crypto ETF applications.

On May 9, 2025, BlackRock held a meeting with the U.S. Securities and Exchange Commission (SEC) Cryptocurrency Working Group to discuss cryptocurrency asset regulation. After the meeting, BlackRock submitted revised applications for the Ethereum Spot ETF (ETHA) and Bitcoin Spot ETF (IBIT), introducing mechanisms for physical creation and redemption, and included a disclosure of quantum computing risks in IBIT. This indicates that BlackRock is maintaining close communication with regulatory bodies in advancing the compliance process for cryptocurrency asset products.

BlackRock and SEC Meeting: Focusing on Core Issues of Crypto Asset Regulation

On May 9, 2025, BlackRock's regulatory affairs, digital assets, and legal compliance teams held talks with the SEC's cryptocurrency task force. The meeting covered several key issues related to crypto assets, including:

Presentation of Digital Asset Products: BlackRock presented its existing and proposed crypto asset products, including the iShares Bitcoin Trust (IBIT), iShares Ethereum Trust (ETHA), and BlackRock USD Institutional Digital Liquidity Fund (BUIDL).
Staking Mechanism: The parties discussed how to handle exchange-traded products (ETPs) with staking capabilities under the current regulatory framework and explored their potential impact on investor returns and product design.
Asset Tokenization: The meeting explored how to advance the tokenization of traditional assets under federal securities regulations and considered its potential applications in capital markets.
ETF Approval Standards and Option Design: BlackRock and the SEC engaged in technical discussions on the approval standards for cryptocurrency ETPs, covering issues such as position and exercise limits, underlying asset liquidity thresholds, and suggested establishing a transitional regulatory framework to accommodate market developments.

This meeting continued the ongoing dialogue between the two parties since April 1, demonstrating BlackRock's active participation in the policy-making process and its efforts to advance product design and application processes before regulatory clarity is achieved.

ETHA and IBIT Amendment Applications: Adding Physical Creation/Redemption Clauses

Following the meeting, BlackRock promptly submitted revised S-1 application documents for ETHA and IBIT. According to Bloomberg ETF analyst James Seyffart, the main change for ETHA is the addition of a clause allowing physical creation and redemption, pending SEC approval. This means that, with regulatory consent, ETF shares could be subscribed and redeemed using actual Ethereum (ETH) rather than being limited to a cash model.

For IBIT, in addition to previously included physical redemption language, the revision also added disclosures regarding "quantum computing risks," reflecting BlackRock's emphasis on potential technological risks and enhanced compliance transparency. Quantum computing risks refer to the potential for quantum computers to break current cryptographic security, which could impact the security of digital assets.

The physical creation/redemption mechanism is considered a key design in the ETF market for improving trading efficiency and reducing costs. For example, most gold ETF issuers adopt a physical model, which more effectively reflects market prices and reduces arbitrage opportunities. If crypto ETFs can achieve a similar mechanism, it will help enhance their market competitiveness and liquidity.

Background of the Crypto ETF Market and BlackRock's Role

As the world's largest asset management company, managing assets worth $11.58 trillion, BlackRock's actions in the crypto ETF field are closely watched by the market. As of now, IBIT's asset size has reached $62.9 billion, while ETHA stands at $2.6 billion. According to Coinpedia, since its launch, IBIT has accumulated net inflows of approximately $44 billion, while ETHA has seen $4.2 billion.

In the history of spot Bitcoin ETF applications, many asset management companies had negotiated with the SEC for years without success until BlackRock entered the arena in mid-2023, prompting a shift in the regulatory body's stance on spot ETFs. Now, BlackRock is once again advancing the revised applications for ETHA and IBIT, indicating its continued deepening of its presence in the digital asset field.

Additionally, BlackRock is actively exploring the application of asset tokenization. Recently, the company plans to collaborate with BNY Mellon to tokenize its $150 billion money market fund using distributed ledger technology (DLT), further achieving the integration of traditional finance and blockchain technology.

Ongoing Evolution of the Crypto ETF Regulatory Environment

According to reports from CryptoSlate and Watcher.Guru, the SEC is currently under pressure to review over 70 crypto ETF applications. Although SEC Chairman Paul Atkins is open to expanding crypto product approvals, he emphasizes the need to ensure market integrity and investor protection.

In this context, the ongoing dialogue between BlackRock and the SEC not only helps advance its own product progress but may also have an influential impact on the regulatory standards of the overall crypto ETF market. In this meeting, BlackRock also suggested that the SEC consider establishing transitional regulatory guidelines before formal legislation to respond to the rapidly changing market.

BlackRock submits revised versions of ETHA and IBIT ETFs after a meeting with the SEC, marking a new step forward in the progress of their crypto ETF applications.

Key Updates

BlackRock Meets with the SEC: Focus on Crypto ETF Staking and Options Regulation, Regulatory Direction Shifts Towards Collaboration