Discussion on Cryptocurrency ETFs
In a recent discussion hosted by the Bitcoin Policy Research Institute, Hester Peirce, a commissioner with the U.S. Securities and Exchange Commission (SEC), hinted at a potential shift towards allowing cryptocurrency exchange-traded funds (ETFs) to employ an in-kind redemption process for their shares. This method has been a point of contention among various stakeholders in the crypto industry, particularly as prominent firms like BlackRock have been advocating for its adoption.
SEC’s Stance on In-Kind Redemptions
Peirce, a Republican and vocal supporter of digital asset innovation, addressed inquiries regarding the SEC’s stance on approving such mechanisms during the panel. She indicated that there has been a significant push from the financial industry for the SEC to transition ETFs from a cash-only model to one that supports in-kind creation and redemption. This change could allow ETFs to more efficiently manage their assets and better align with the needs of cryptocurrency investors.
Earlier this year, BlackRock took a pivotal step by submitting a 19b-4 form through Nasdaq, seeking regulatory approval for this adjustment. Following their lead, several other financial institutions have also filed similar proposals to the SEC.
Future Developments
While the specific outcomes of these filings remain uncertain, Peirce noted that they are currently under consideration, expressing optimism about future developments.
“I can’t predict the outcome, but we have definitely heard a lot of interest in this,”
she remarked, providing a glimmer of hope for the many players in the crypto ETF space awaiting regulatory clarity.
