Cboe has submitted amendments to the SEC enabling in-kind creation and redemption for five spot Bitcoin and Ethereum ETFs from issuers ARK 21Shares, VanEck, Fidelity, WisdomTree, and Invesco Galaxy. Bloomberg ETF analyst James Seyffart highlighted this cluster of filings as a "positive signal" that regulators are collaborating on finalizing an in-kind framework rather than blocking it. The amendments would allow authorized participants (large financial institutions) to directly exchange BTC or ETH for ETF shares, bypassing cash transactions.
Concurrently, NYSE Arca amended Bitwise's Bitcoin and Ethereum ETFs for pure in-kind baskets, while Nasdaq sought conversion of BlackRock's iShares Bitcoin Trust to in-kind—aligning with language in its January 2024 S-1 filing. The SEC has extended its review period for these proposals, citing the need for thorough evaluation. Though retail investors won't directly access in-kind redemptions, the structural shift promises enhanced tax efficiency, reduced spreads, and lower hedging costs during market volatility by mirroring traditional commodity/equity ETF mechanics.
Seyffart emphasized that smoother primary-market operations could reinforce secondary-market efficiency, with historical precedents suggesting tighter NAV tracking and liquidity improvements. All filings await SEC clearance to transition from the cash-only model mandated at launch.