Major crypto ETF issuers like Ark 21Shares and VanEck have filed amendments with the SEC proposing the use of in-kind creation features for ETFs. This could substantially enhance efficiency and attractiveness of crypto ETFs.
Market Impact
The proposed in-kind feature could significantly affect crypto ETFs by enabling direct asset swaps, thereby improving efficiency and attracting institutional investors. James Seyffart from Bloomberg Intelligence noted that '5 different funds on CBOE filed amendments with the SEC. This indicates to me that there is positive movement and likely fine tuning happening with the SEC.'
Regulatory Shift
The implementation of in-kind transactions marks an important regulatory shift, as highlighted by SEC Commissioner Hester Peirce, acknowledging the growing interest in these processes. Currently, the proposal is targeted at major firms rather than retail traders, allowing them to exchange ETF shares for the underlying assets.
Institutional Interest
Immediate effects from these filings could streamline the process for ETFs, reducing trade friction and tax implications. Such changes may also drive more interest from institutional investors in cryptocurrencies like Bitcoin and Ethereum.
If the amendments are successful, they could set a precedent that may reshape the landscape for crypto assets, similar to what has happened with traditional ETFs.
