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Coinpaprika 2025-01-28 08:33:41

Cboe Pushes SEC for In-Kind Bitcoin, Ethereum ETF Changes

The Cboe BZX Exchange has proposed a rule change to the US Securities and Exchange Commission (SEC) to allow in-kind creations and redemptions for the ARK 21Shares Bitcoin ETF (ARKB) and the 21Shares Core Ethereum ETF (CETH). This approach, designed for Authorized Participants (APs), could improve cost efficiency, reduce taxable events, and keep ETF prices closely aligned with their underlying assets. "In-kind" refers to the method of creating or redeeming ETF shares by using assets like Bitcoin or Ethereum instead of cash. For instance, an AP creating new shares of a Bitcoin ETF would deliver Bitcoin to the issuer in exchange for ETF shares. Similarly, redeeming shares would result in the receipt of Bitcoin rather than cash. This process eliminates several steps, minimizes transaction costs, and streamlines operations. The filing, submitted on January 27, comes shortly after a similar proposal by Nasdaq for BlackRock’s iShares Bitcoin Trust (IBIT). Bloomberg analyst James Seyffart highlighted that in-kind transactions make ETFs more efficient , noting that most ETFs already use this streamlined model. The ARK 21Shares Bitcoin ETF and the 21Shares Core Ethereum ETF were approved by the SEC in January and May 2024, respectively. Both products are among the leading ETFs in the market. As of January 27, ARKB ranks as the fourth-largest Bitcoin ETF, with cumulative net inflows of $2.91 billion and $5.10 billion in total net assets. It also holds 0.25% of the total Bitcoin market share. On the Ethereum side, CETH stands as the eighth-largest Ethereum ETF. It has net inflows of $11.40 million and $16.77 million in total net assets. Cboe’s move aligns with trends in the ETF industry, where efficiency and cost-effectiveness are becoming priorities . The proposed changes aim to bring the ARK 21Shares Bitcoin and Ethereum ETFs in line with industry standards for in-kind transactions, which have been widely adopted across other ETF types. The SEC's decision on this proposal could signal a significant shift in the operational framework of cryptocurrency ETFs, paving the way for improved performance and investor benefits. This development underscores the growing importance of cryptocurrency-backed ETFs in the broader financial market.

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