Crypto ETFs May Soon Have In-Kind Feature As Five Issuers File Amendments

Five issuers have submitted amendments filings to the US Securities and Exchange Commission (SEC) seeking approvals for in-kind features on their crypto exchange-traded funds (ETFs). While the SEC has delayed giving its approvals, James Seyffart argues that a crypto ETF will soon receive regulatory blessings for in-kind creation and redemptions.

Expert Predicts Crypto ETF To Receive Approval For In-Kind Feature

Bloomberg analyst James Seyffart is predicting that the US SEC may allow Bitcoin and Ethereum ETFs to offer in-kind creation and redemptions. Seyffart shared his views via an X post, pointing to a flurry of new amendment filings with the securities watchdog.

Five funds on CBOE have filed amendments seeking the SEC’s consent to include the features in their offerings. According to the filing numbers, the issuers include Ark 21, VanEck, Invesco, WisdomTree, and Fidelity.

Seyffart describes the new filings as “positive signs” of a changing stance by the SEC toward the in-kind creation and redemptions. Back in April, the SEC delayed VanEck’s application for in-kind features, with BlackRock throwing its hat in the ring with its application.

“5 different funds on CBOE filed amendments with the SEC,” said Seyffart. “This indicates to me that there is positve movement and likely fine tuning happening with the SEC.”

Typically, in-kind creation and redemption will allow a crypto ETF to exchange assets directly rather than relying on cash. An approval by the SEC will allow investors to sidestep capital gains taxes since crypto assets are not sold, with Seyffart highlighting “efficiency” perks for ETFs.

Amendment Will Not Apply To Retail

In his X post, Seyffart notes that introduction of in-kind features to the crypto ETFs will not apply to retail traders. Seyffart says if approved, only Authorized Participants like “Big Wall Street firms and market makers” can trade in shares of their ETFs for the underlying asset.

“This will make current and future crypto ETFs more efficient,” Seyffart added. “But the vast majority of people won’t even see a difference because the products on the market now already trade extremely efficiently.”

Meanwhile, the securities watchdog under Paul Atkins is warming toward cryptocurrencies with the SEC’s Crypto Task Force organizing a series of roundtables with key industry players. Furthermore, a softening stance has seen Ethereum ETF daily inflows set a record high of $717 million.

Amid the raft of amendments, several issuers are filing for staking features on their crypto ETFs. After the Rex-Osprey Solana ETF launched with staking functionality, BlackRock has filed for staking in its Ethereum ETF.

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Aliyu Pokima

Aliyu Pokima is a seasoned cryptocurrency and emerging technologies journalist with a knack for covering needle-moving stories in the space. Aliyu delivers breaking news stories, regulatory updates, and insightful analysis with depth and precision. When he’s not poring over charts or following leads, Aliyu enjoys playing the bass guitar, lifting weights and running marathons.

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