Bitcoin News Today: Fidelity Amends Bitcoin ETF to Enable In-Kind Transactions, Boosting Institutional Efficiency

Fidelity Investments has introduced amendments to its spot Bitcoin ETF to enable in-kind redemptions and creations, a move aimed at enhancing trading efficiency for institutional investors. The Fidelity Wise Origin Bitcoin Fund updated its trust agreement to allow transactions where shares can be exchanged for physical Bitcoin, bypassing cash-based processes [1][2]. This aligns the fund with traditional equity ETF structures, where in-kind mechanisms are standard, and reflects a broader industry push to adopt similar practices across crypto assets. The changes, first highlighted on social media platforms and later confirmed via regulatory filings [3][4], could reshape institutional trading dynamics by streamlining asset flows and reducing operational costs.

The shift to in-kind redemptions is part of an evolving regulatory landscape. U.S. crypto ETF providers, including Cboe, have also filed amendments to permit in-kind transactions for their products [5], signaling growing flexibility from the Securities and Exchange Commission (SEC). While the agency has not yet finalized a comprehensive framework for digital assets, recent developments—such as the Bitwise ETF approval followed by a subsequent pause [8]—underscore its cautious approach. Analysts note that the SEC may use stay orders to delay ETF launches while refining oversight guidelines [7], but the push for in-kind mechanisms suggests confidence in crypto markets' stability.

For institutional investors, the amendment addresses critical inefficiencies. In-kind redemptions allow large-scale exchanges of ETF shares for Bitcoin without triggering market impact from cash transactions [1]. This reduces reliance on cash buffers and enhances capital efficiency, a key advantage for major Wall Street firms and market makers. James Seyffart, an ETF analyst at Bloomberg, highlighted that these changes "are more positive signs regarding Bitcoin & Ethereum ETFs obtaining the ability to do in-kind creation and redemption," aligning U.S. products with global norms [4]. Hester Peirce, an SEC commissioner, acknowledged the regulatory momentum, stating that the process is "certainly on the horizon" given the sector's interest [1].

The implications for market structure are significant. By adopting in-kind mechanisms, Bitcoin ETFs could compete more effectively with traditional assets in terms of cost and efficiency. Fidelity’s move positions it as a leader in adapting institutional-grade tools to crypto, potentially influencing future ETF launches. However, the success of these products will depend on sustained regulatory clarity and demand. The SEC’s current pause on crypto ETFs, as seen with Bitwise’s application [8], illustrates the agency’s balancing act between fostering innovation and managing perceived risks.

Industry experts remain cautious but optimistic. While the regulatory environment remains a key variable, the trend toward in-kind redemptions signals a maturing market. Fidelity’s amendment, alongside similar filings by peers, reflects a strategic shift to align with global standards and institutional expectations. As the SEC continues its review process, market participants will closely monitor how these changes shape capital flows and investor behavior in the crypto asset class.

Sources:

[1] [Fidelity Wise Origin Bitcoin Fund amends trust agreement to allow in-kind share transactions](https://ng.investing.com/news/sec-filings/fidelity-wise-origin-bitcoin-fund-amends-trust-agreement-to-allow-inkind-share-transactions-93CH-2021973)

[2] [Fidelity files to amend its spot Bitcoin ETF to allow in kind redemptions and creations](https://x.com/BitcoinMagazine/status/19481179****9581449)

[3] [Adrian Morris on X: "Looks like in kind redemption is coming..."](https://x.com/Adrian_R_Morris/status/1948120794665816336)

[4] [Bitcoin and Ethereum ETFs Seek In-Kind Redemptions...](https://twitter.com/MetaEraHK/status/19477143****9428410)

[5] [In-kind redemption for Bitcoin and Ethereum ETFs get '...](https://cryptoslate.com/in-kind-redemption-for-bitcoin-and-ethereum-etfs-get-positive-sign-as-cboes-files-amendments/)

[6] [The SEC Is About To Approve A Key Advancement For...](https://www.cointribune.com/en/the-sec-is-about-to-approve-a-key-advancement-for-crypto-etfs/)

[7] [Why the SEC is stalling new crypto ETFs even after...](https://cryptoslate.com/why-the-sec-is-stalling-new-crypto-etfs-even-after-greenlighting-them/)

[8] [SEC Approves, Immediately Pauses Bitwise's Bid to...](https://ca.finance.yahoo.com/news/sec-approves-immediately-pauses-bitwises-215055666.html)