Key takeout
The SEC’s Crypto Task Force discussed the staking approach for Crypto ETP using Jito Labs and Multicoin Capital. The two models proposed for staking in ETPS aim to enhance investor returns and network security.
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The SEC’s Crypto Task Force, led by Commissioner Hester Peirce, met with representatives from Jito Labs and Multicoin Capital Management on February 5th, and according to a memo released, staking as a feature of Crypto Exchange-Traded Products (ETP). We will discuss the possibility of inclusion. Sec.
Staking is the process of locking cryptocurrency to validate transactions and protect the network, and participating in the operation of a Sportof-stake (POS) blockchain network. Participants will receive a reward for their contributions.
Jito Labs Chief Legal Officer Lucas Bruder and Rebecca Rettig joins Multicoin Capital’s managing partners Kyle Samani and General Counsel Greg Xethalis to present two proposed models for implementing Crypto ETP. did.
In the initial proposal, called the service model, ETPS can bet some of their native assets through the Valitta service provider, while maintaining timely redemption. The second approach, the LST model, includes ETPs that hold liquid staking tokens representing stake versions of native assets.
“Stakeking is an important part of the POS/DPOS blockchain and is a unique feature of native tokens in such networks,” the company said in its presentation document.
The meeting addressed previous concerns that led to the removal of staking capabilities from previous ETP applications, including the timing of redemption, the tax impact on grantor trusts, and the classification of staking services as a securities transaction.
Jito Labs and Multicoin Capital advocate the SEC to allow staking on Crypto Asset ETPS. Companies restrict Crypto ETP staking by “harming investors by impairing the productivity of the underlying asset, and by preventing a significant portion of the circulating supply of assets from betting. “By taking away potential returns and network security from investors.”
CBOE BZX Exchange recently submitted Form 19b-4 to the SEC, suggesting that staking be possible within the 21 share core Ethereum ETF. This is the first time that such a request has been formally created for the ETF following the SEC approval of the SPOT Ethereum ETF last year.
Previously, 21Shares and Ark Invest tried to launch the Staked Ethereum ETF, but ultimately removed the staking feature from the application. Ark Invest later abandoned its Ethereum ETF plan, leaving 21 shares to advance the 21 share core Ethereum ETF.
Other companies pursuing Spot Ethereum ETFs initially included staking, but later revised the proposal by choosing a cash creation and redemption process.
The SEC’s Crypto Task Force also held meetings with other industry leaders, including representatives from the Blockchain Association and NASDAQ, to discuss approaches to address issues related to Crypto Assets Regulation.
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