The U.S. SEC is now reviewing BlackRock’s proposal to include in-kind redemptions in its spot Ethereum ETF—a mechanism that would allow large institutions to receive actual ETH instead of cash when redeeming shares. Though not yet approved, this step signals regulatory momentum.
The model is seen as more efficient and could enhance ETF performance. BlackRock had to drop this feature from its Bitcoin ETF earlier this year to satisfy SEC demands, but renewed interest suggests a shifting regulatory tone, especially after former Chair Gary Gensler’s departure.
On the same day BlackRock submitted the Ethereum request (May 13), the SEC also delayed a decision on in-kind redemptions for its Bitcoin ETF. The change would only apply to authorized participants, not everyday investors.
With Commissioner Hester Peirce expressing support for more issuer flexibility, the market is watching closely. If approved, this could significantly improve the structure and appeal of crypto ETFs.
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