Cboe Proposes In-Kind Bitcoin, Ethereum ETF Transactions to SEC

Cboe Seeks SEC Nod for In-Kind Transactions in Bitcoin and Ethereum ETFs

Cboe Global Markets, a leading exchange operator, has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to allow in-kind transactions for Bitcoin and Ethereum exchange-traded funds (ETFs). This move aims to enhance the efficiency and accuracy of these ETFs, which have gained significant traction among investors.

In-kind transactions enable institutional investors and authorized participants (APs) to trade shares of the ETF directly for the underlying cryptocurrency, rather than using cash. This approach reduces intermediaries and streamlines the transaction process, more accurately reflecting the decentralized nature of cryptocurrencies.

The proposal comes on the heels of the SEC's recent approval of spot Bitcoin ETFs, which initially offered a cash redemption model. Market advocates have long argued for the implementation of in-kind mechanisms, as they believe it better represents the underlying asset and reduces operational complexity.

Cboe's filing is expected to influence other issuers of cryptocurrency ETFs to adopt in-kind redemption for their products. While Cboe hasn't filed for an Ethereum ETF, this innovation reinforces its commitment to the fast-evolving crypto ETF market. The exchange operator continues to lead the way in Bitcoin and other crypto-backed ETFs.

The in-kind model is particularly beneficial for institutional investors, who can quickly monitor demand and execute trades without the need for cash transactions. However, retail investors may still be excluded from this process, as they typically do not have access to the same level of institutional infrastructure.

The SEC's decision on Cboe's proposal will have significant implications for the crypto ETF market. If approved, in-kind transactions could become the new standard for Bitcoin and Ethereum ETFs, enhancing their efficiency and accuracy. This, in turn, could attract more institutional investors to the crypto market, further driving its growth and adoption.