SEC's Peirce supports idea of in-kind redemptions for Bitcoin ETFs

Hester Peirce of the US Securities and Exchange Commission (SEC) predicts that in-kind redemptions for Bitcoin ETFs are “on the horizon”. This mechanism would allow investors to exchange their ETF shares for actual bitcoins instead of cash.

Many financial institutions, including BlackRock and Fidelity, have already submitted proposals to the regulator to adopt this model. As Coinwy experts note, such changes could dramatically transform the cryptocurrency market landscape.

The innovation will first affect bitcoin-backed funds. Switching to in-kind redemption is set to reduce market participants' costs by eliminating additional tax charges. This, in turn, will increase the instrument's attractiveness to institutional investors.

Coinwy experts also speculate that if approved, the model might later extend to other cryptocurrencies, such as ETH. The approval of BlackRock and Fidelity’s proposals could mark a major milestone for the industry.