The Block recently reported that Hester Peirce, one of the key figures at the U.S. Securities and Exchange Commission (SEC), suggested that in-kind redemptions for crypto exchange-traded funds (ETFs) might be on the way. This speculation arose when Peirce, a Republican Commissioner, was questioned about the possibility of the SEC approving in-kind creation and redemptions during a Bitcoin Policy Institute panel discussion.
Large firms like BlackRock have been persuading the SEC to allow in-kind creations and redemptions for bitcoin ETFs, a shift from the current cash-based system. In fact, Nasdaq submitted a Form 19b-4 on behalf of BlackRock in January to initiate this change, and several other companies have followed suit.
“These (forms) are currently under review,” Peirce stated. “I believe that it’s something we can look forward to. I can’t make any promises, but we do acknowledge the high level of interest.”
Prior to the SEC approving spot bitcoin ETFs over a year ago, companies were grappling with the technical aspects of how the redemption process for these products would function. The SEC preferred a cash model, which necessitated companies like BlackRock to sell the bitcoin immediately upon removal from storage and then return the cash to the investor.
James Seyffart, a Bloomberg Intelligence ETF analyst, argued in January that this mechanism would increase trading efficiency for funds. Under the Trump administration, the SEC exhibited a more welcoming stance towards crypto compared to the Biden administration. Since the change in regime, companies have been attempting to secure the SEC’s approval for a variety of crypto ETFs, ranging from those tracking XRP, SOL, and DOGE.
Seyffart, along with Eric Balchuna, a senior ETF analyst at Bloomberg, has raised the likelihood of the SEC approving the majority of spot crypto ETF applications to 90% or more.
Disclaimer: This article is purely informational and should not be considered as legal, tax, investment, financial, or other advice.
