Crypto ETF In-Kind Redemptions on the Horizon
In-kind redemptions for crypto exchange-traded funds (ETFs) might soon be possible, according to Hester Peirce, a leading figure in the U.S. Securities and Exchange Commission (SEC). During a panel at the Bitcoin Policy Institute, Peirce acknowledged the ongoing process of considering such changes in response to industry requests, notably from BlackRock, which seeks a shift from a cash-based model to one allowing in-kind creations and redemptions specifically for bitcoin ETFs. BlackRock initiated this change formally by submitting a Form 19b-4 via Nasdaq in January, with other firms following suit. Peirce indicated that the progress in these submissions shows a keen interest in the matter, although definitive outcomes cannot yet be predicted. Previously, the SEC mandated a cash redemption model for spot bitcoin ETFs, requiring firms to liquidate bitcoin holdings promptly to return cash. Analyst James Seyffart noted that allowing in-kind redemptions could enhance trading efficiency of the funds. Under the current U.S. administration, the SEC's outlook on crypto has evolved, raising the likelihood of approval for various crypto ETFs. The Block, an independent news source in the crypto domain, emphasizes its objective approach in presenting information, noting its existing financial ties to companies within the crypto space.
FAQ
❓ What is an in-kind redemption for a crypto ETF?
In-kind redemption allows ETF investors to exchange their shares for the actual underlying crypto assets instead of cash.
❓ Why is in-kind redemption beneficial?
In-kind redemptions can improve trading efficiency and potentially reduce transaction costs by eliminating the need to sell assets for cash.
❓ What is the current SEC stance on crypto ETFs?
The SEC's stance is evolving, with increased openness to various crypto ETFs, though definitive decisions on in-kind redemptions are pending.