The SEC continues to explore the possibility of implementing a physical redemption mechanism for cryptocurrency ETFs. Comments from Commissioner Hester Peirce highlight growing institutional interest.
Discussion on Physical Redemption Mechanism
At a recent panel, SEC Commissioner Hester Peirce discussed the possibility of introducing a physical redemption mechanism for crypto ETFs. This would allow ETFs to buy and sell assets without using cash, attracting attention from major industry players.
Potential Changes in ETF Structures
Changes in ETF mechanics may reduce transaction costs and improve liquidity. According to Peirce, "These forms are currently under review. At some point, the physical subscription and redemption mechanism will definitely come. I can’t judge in advance, but we have heard that many companies are very interested in this."
Impact on Crypto Market Liquidity
The potential shift in cryptocurrency ETF structures is reminiscent of changes made to gold ETFs, where in-kind redemption significantly improved liquidity and market reach.
Thus, potential changes in crypto ETF mechanisms could open new avenues for institutional investors while enhancing the efficiency and accessibility of the crypto market.
