Cboe Requests SEC Approval for In-Kind Transactions in Bitcoin, Ethereum ETFs
The Cboe BZX Exchange has proposed a rule change to the SEC for in-kind creations and redemptions for the ARK 21Shares Bitcoin ETF (ARKB) and the 21Shares Core Ethereum ETF (CETH). Key points include:
- In-kind transactions involve using assets like Bitcoin or Ethereum instead of cash for creating or redeeming ETF shares.
- This method can enhance cost efficiency, reduce taxable events, and align ETF prices with their underlying assets.
- Similar proposals have been made for BlackRock’s iShares Bitcoin Trust (IBIT).
- As of January 27, ARKB is the fourth-largest Bitcoin ETF with $2.91 billion in net inflows and $5.10 billion in total net assets.
- CETH ranks eighth among Ethereum ETFs with $11.40 million in net inflows and $16.77 million in total net assets.
- The proposed changes aim to optimize operations and align with industry standards for ETFs.
- The SEC's decision may significantly impact the operational framework of cryptocurrency ETFs.
This development highlights the increasing significance of cryptocurrency-backed ETFs in the financial market.