The US Securities and Exchange Commission (SEC) is seeking comments on a proposal to allow Bitcoin and Ether ETFs to perform operations using cryptocurrency instead of cash. In February, Cboe BZX Exchange filed an application to permit such operations for two ETFs.
In-Kind Operations Proposal
On February 5, Cboe BZX Exchange, a securities exchange, filed an amended application with the SEC to permit 'in-kind' creations and redemptions for two ETFs: ARK 21Shares Bitcoin ETF and 21Shares Core Ethereum ETF.
Benefits of In-Kind Operations
Allowing in-kind operations for crypto ETFs would improve the funds’ tax efficiency and promote institutional adoption of BTC and ETH. Such operations are preferred by most ETF issuers and investors due to their tax advantages.
Impact on the Crypto Market
US regulators are expected to ease their oversight of cryptocurrencies following several new ETF proposals. In 2024, various filings for listing ETFs with altcoins were submitted. Bloomberg Intelligence anticipates high chances of approval for new filings.
Transitioning Bitcoin and Ether ETFs to in-kind operations could be a significant step in cryptocurrency market development, fostering digital asset adoption and providing new opportunities for market participants.
