Recent discussions within the SEC regarding crypto ETFs raise the question of in-kind redemptions, paving the way for changes in existing processes.
What are In-Kind Redemptions?
In-kind redemptions allow ETF issuers to return assets to investors in the form of crypto assets rather than cash. This can enhance efficiency and reduce costs, allowing investors to directly receive their assets.
SEC and BlackRock's Position
In January, Nasdaq submitted a proposal on behalf of BlackRock to implement in-kind processes for Bitcoin ETFs, shifting from the current cash-based framework. The SEC previously insisted on a cash redemption model. However, during a collective discussion among Bitcoin ETF issuers, Commissioner Peirce confirmed that the review of applications is ongoing.
The Future of In-Kind Redemptions for Crypto ETFs
Commissioner Peirce hinted that in-kind redemptions may become a reality for Bitcoin ETFs in 2025. While this model sparks interest, no official commitments have been made yet. Nevertheless, experts believe that this situation can significantly enhance trading efficiency.
The introduction of in-kind redemptions for crypto ETFs may be a crucial step towards improving the market. While the SEC is exploring the feasibility of these changes, the future remains uncertain, and further discussion is needed to achieve consensus.
