Bitcoin and Ethereum ETF issuers file amendments for in-kind redemptions, signaling 'positive movement' with SEC

Several ETF issuers filed amendments with the U.S. Securities and Exchange Commission to permit in-kind creations and redemptions from their spot crypto funds, something one expert says indicates that there is positive momentum going on at the agency.

21Shares, Fidelity, Franklin Templeton, Galaxy, VanEck, and WisdomTree all submitted their amended proposals Tuesday morning seeking to make their spot Bitcoin and Ethereum exchange-traded funds, as well as future crypto ETFs, more efficient.

"More positive signs," Bloomberg Intelligence ETF analyst James Seyffart said in a post on X ."This indicates to me that there is positive movement and likely fine tuning happening with the SEC."

These firms have been seeking in-kind redemptions for months, and SEC Commissioner Hester Peirce said last month that in-kind redemptions for crypto ETFs are "on the horizon."

"Those (forms) are going through the process now," Peirce said on June 25. "So I think that's something that's certainly on the horizon at some point. I can't prejudge, but we hear that there's a lot of interest."

Seyffart clarified that this would only be for the "authorized participants" like major Wall Street firms and market makers — not retail traders — to trade in shares of their ETFs for the underlying asset.

"[T]he vast majority of people won't even see a difference because the products on the market now already trade extremely efficiently," Seyffart said. "This will treat crypto ETPs the same as other ETPs are treated.

Crypto ETF "floodgates" are poised to open as the SEC is also weighing a faster approval framework, The Block's Sarah Wynn previously reported. Following spot $BTC ETFs (January 2024) and spot $ETH ETFs (July 2024), there are now several dozen more crypto-related ETFs seeking approval. [The Block]