The Crypto Task Force of the US Securities and Exchange Commission (SEC) met industry representatives on 5 February to possibly explore, including setting deployment in crypto-exchange-related products (ETPs).
Jito Labs CEO Lucas Bruder and Chief Legal Officer Rebecca Rettig attended the meeting, together with Multicoin Capital Managing Partner Kyle Samani and General Counselor Greg Xethalis.
According to a SEC request, the companies argued that deployment is intrinsic for blockchain networks of proof-of-stake (POS) such as Ethereum (ETH) and Solana (SOL).
With deportation, network validators can lock up native assets – such as ETH or Sol – to participate in the consensus mechanism of the network. As rewards, they earn transaction costs and newly beaten tokens.
According to representatives of the industry, the exclusion of ETPs from ETP’s investors prevents the full benefits of POS-based assets being realized, reducing the potential return and weakening network security.
Sec -overcome
The SEC has previously expressed its concern about setting in ETPs, including timelines for repayment that could disrupt the standard T+1 settlement cycle, the tax treatment of the use of rewards and the treatment of setting as a service.
These worries led the SEC to adopt a cautious position when allowing bets in ETP structures. The first Ethereum ETP applications include the setting of functions, but they had to remove issuers at the request of the SEC.
To alleviate the fears of the SEC, players in the industry presented two models during the meeting that could facilitate the setting within ETPs and at the same time tackle the most important concerns of the regulator.
The first is called the “Services model”, which means that part of the ETP-retained assets can be used via external service providers with validator nodes. This method ensures that the assets are set and at the same time make timely repayments possible, possible via a proportional system where only a fraction of the participations is actively established.
The second method is the “liquid strike token model”, in which ETPs keep liquid strike tokens (LSTs) representing set assets. For example, a Solana -based ETP can include Jitosol, a derivative for liquid use of Sol.
This second model reduces concern about the timing of repayments and streamlines within an ETP framework streamlining by preventing direct involvement in the expansion process.
Representatives of the industry assured the SEC that both proposed models could effectively tackle these worries. The service model ensures controlled exposure to striking, so that the repayments are achieved without delay, while the LST model completely removes the direct impact of setting on the repayment cycles.
Posture
Despite the historical worries of the SEC about including setting in Cryptoetp’s, recent developments suggest that the regulatory body may be open to reconsider its posture.
An important development is the internal changes of the regulator, including the nomination of pro-Crypto commissioner Mark Uyeda as acting chairman of the SEC.
The regulator then founded a crypto-task force under the leadership of pro-Crypto-commissioner Hester Peirce. The Task Force wants to help create a regulatory framework for crypto. Peirce had previously suggested In the event of changes led by the new Pro-Crypto SEC that takes place early in 2025 ‘earlier’ early ‘, including the inclusion of deportation in Ethereum Exchange-treated Funds (ETF).
In the meantime, institutional interest in crypto -based financial products are assuming and aids are being studied for these investors. An example is to include options in Spot Bitcoin (BTC) ETF. Although the SEC still has to take a definitive attitude, the discussion signals a possible shift in regulations perspective.
Bloomberg ETF analyst James Seyffart said That, although these discussions had taken place years ago, the interest of the regulator in this matter is a good start.