Bitcoin News Today: Fidelity Amends Bitcoin ETF for In-Kind Redemptions, Aligning with Industry Modernization Efforts

Fidelity Investments has filed amendments to its spot Bitcoin ETF, the Fidelity Wise Origin Bitcoin Fund, to enable in-kind creation and redemption of shares. This change allows institutional investors to exchange physical Bitcoin for ETF shares or vice versa, bypassing cash transactions and reducing operational friction. The move, submitted on July 21, 2025, aligns with similar efforts by other issuers such as Ark 21Shares and Invesco Galaxy, reflecting a broader industry push to modernize crypto ETF structures [1]. The amendments aim to enhance liquidity, lower trading costs, and align the product with traditional ETF practices, particularly for market makers and arbitrageurs [2].

The regulatory landscape for in-kind mechanisms in crypto ETFs remains evolving. While the U.S. Securities and Exchange Commission (SEC) has not yet approved such transactions, officials have signaled openness to the concept, provided a robust oversight framework is established [3]. Analysts suggest the SEC’s potential approval could set a precedent for other providers, fostering competition and transparency in the nascent market [4]. However, the agency has also indicated it may delay launches through stay orders until regulatory clarity is achieved, highlighting ongoing uncertainties [5].

In-kind redemptions offer distinct advantages for investors, particularly in a volatile crypto market. By allowing direct swaps of Bitcoin for ETF shares, investors can avoid capital gains taxes that arise from selling assets for cash [6]. This feature addresses a key barrier to institutional adoption, where tax inefficiencies and liquidity constraints have historically limited participation. Fidelity’s move underscores its role as a bridge between traditional asset management and blockchain-based holdings, leveraging its custodial and trading infrastructure to support institutional-grade products [7].

The amendments also highlight the SEC’s shifting stance on crypto innovation. While the agency has long resisted cash-based Bitcoin ETFs, recent statements indicate a willingness to accommodate in-kind mechanisms if they align with investor protection goals [8]. This pivot could mark a pivotal moment for the sector, enabling crypto ETFs to function more like their traditional counterparts while addressing unique digital asset challenges. Analysts, including James Seyffart of Bloomberg, note the SEC’s openness as a positive sign, with fine-tuning of rules expected ahead of potential approvals [9].

Structurally, in-kind transactions are expected to improve market efficiency by reducing price slippage and transaction costs. Unlike cash-based redemptions, which require selling assets to fund trades, in-kind mechanisms enable direct swaps, minimizing market impact. This could stabilize demand for underlying cryptocurrencies, as redemptions draw on existing holdings rather than triggering new sales [10]. For Fidelity, the amendments position its ETFs as a test case for integrating in-kind processes into an increasingly institutionalized crypto ecosystem.

Critically, the success of in-kind redemptions hinges on regulatory clarity and operational readiness. The SEC’s June 20, 2025, deadline for public comments on proposed rules suggests a formal approval process is underway [11]. If implemented, the changes could redefine how institutional and retail investors interact with digital assets, bridging gaps between traditional and crypto markets. The broader implications extend beyond Fidelity, as other issuers await similar regulatory greenlights to expand their offerings [12].

The evolving landscape underscores the interplay between innovation and regulation in crypto markets. As firms like Fidelity push the boundaries of product design, the SEC’s role in balancing risk mitigation with market growth remains central. The amendments to the Fidelity Bitcoin ETF signal a step toward operational parity with traditional assets, but the ultimate impact will depend on regulatory decisions and market adoption.

Source:

[1] [Fidelity Wise Origin Bitcoin Fund amends trust agreement](https://www.investing.com/news/sec-filings/fidelity-wise-origin-bitcoin-fund-amends-trust-agreement-to-allow-inkind-share-transactions-93CH-4149122)

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

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

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

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

[6] [SEC, Potential Approval of 'In-Kind (Spot)' Function for Digital Assets](http://www.eblockmedia.com/news/articleView.html?idxno=24405)

[7] [Fidelity Ethereum Fund amends trust agreement](https://www.investing.com/news/sec-filings/fidelity-ethereum-fund-amends-trust-agreement-to-allow-inkind-share-transactions-93CH-4149114)

[8] [SEC May Soon Grant Highly-Awaited Approval for Bitcoin and Ethereum ETFs](https://en.bitcoinsistemi.com/sec-may-soon-grant-highly-awaited-approval-for-bitcoin-and-ethereum-etfs-positive-developments-bloomberg-analyst-explains/)

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

[10] [Notice | U.S. Securities and Exchange Commission](https://www.sec.gov/taxonomy/term/193086)

[11] [Notice | U.S. Securities and Exchange Commission](https://www.sec.gov/taxonomy/term/193086)

[12] [Fidelity Wise Origin Bitcoin Fund amends trust agreement](https://www.investing.com/news/sec-filings/fidelity-wise-origin-bitcoin-fund-amends-trust-agreement-to-allow-inkind-share-transactions-93CH-4149122)