BlackRock has questioned the U.S. Securities and Exchange Commission’s (SEC) preference for the 1940 Act in overseeing futures exchange-traded funds (ETFs) related to cryptocurrencies. The asset management firm argued that the SEC’s treatment of spot-crypto and crypto-futures ETF applications should be the same, as there is no legitimate reason for differentiation. BlackRock’s own application for a spot-Ether ETF called the “iShares Ethereum Trust” was recently confirmed. The SEC has approved several crypto futures ETFs but has yet to greenlight any spot-crypto ETFs. The regulator has cited the supposedly superior regulation and consumer protections under the 1940 Act for its preference. However, BlackRock contends that this preference lacks relevance, as it places restrictions on ETFs and sponsors rather than the underlying assets. The firm believes that the SEC’s distinction between futures and spot ETFs is without a difference in the context of ETH-based proposals. BlackRock also highlighted that the SEC’s approval of crypto futures ETFs via the Chicago Mercantile Exchange indicates that surveillance can detect spot-market fraud affecting spot ETFs. Analysts predict that the first SEC approval of a spot crypto ETF, likely Bitcoin-related, is imminent.