EddieJayonCrypto
3 Jun 25
SEC Commissioner Hester Peirce indicated the agency would consider allowing in-kind redemptions for Bitcoin ETFs, enabling investors to receive actual Bitcoin instead of cash. This approach is seen as more efficient, reducing operational challenges and tax issues associated with the current cash red...
SEC Commissioner Hester Peirce has indicated that the agency is considering allowing in-kind redemptions for Bitcoin ETFs, which would enable investors to receive actual Bitcoin instead of cash.Currently, the cash redemption model used for Bitcoin ETFs is less efficient and can create tax complications for investors. This in-cash system requires ETF issuers to manage Bitcoin conversions themselves, leading to operational challenges and potential taxable events when Bitcoin is sold to meet redemption requests.Major ETF issuers, including BlackRock, have proposed allowing in-kind redemptions to streamline Bitcoin ETF operations. BlackRock filed a relevant proposal with Nasdaq in January 2025. This approach allows authorized participants to directly exchange ETF shares for Bitcoin, creating a more streamlined and tax-efficient process.When the SEC initially approved Bitcoin ETFs in early 2024, BlackRock agreed to exclude in-kind redemptions to meet regulatory demands. However, the renewed consideration of in-kind redemptions signals a potential shift toward a more investor-friendly model. If implemented, investors could directly obtain the underlying Bitcoin asset from ETFs, simplifying redemption procedures and reducing operational and tax burdens.