Bitcoin ETF design enters transition phase as industry rethinks operational foundations
The post Bitcoin ETF design enters transition phase as industry rethinks operational foundations appeared on BitcoinEthereumNews.com. Can the push for in-kind design solve the operational mismatches that have long kept Bitcoin ETFs from functioning like the traditional funds they aim to replicate? Summary In late July, five major ETF providers including Fidelity, Ark 21Shares, and VanEck submitted filings to shift their Bitcoin and Ethereum ETFs from a cash-only model to in-kind creation and redemption. The SEC has started to show a more flexible stance, releasing a detailed framework that sets expectations around custody, disclosures, and risk, while also exploring faster approval timelines. In-kind structures would allow direct transfers of crypto between issuers and authorized participants, cutting trading costs, improving tax efficiency, and keeping ETF prices more closely aligned with the spot market. If the changes go through, US-listed crypto ETFs could start operating more like their global counterparts, with better infrastructure for institutional use. Bitcoin ETF giants push for a cleaner crypto swap model Late July 2025 saw five major exchange-traded fund providers, Ark 21Shares, Fidelity, Invesco Galaxy, VanEck, and WisdomTree, submit coordinated amendments to the SEC and Cboe BZX Exchange. The filings advocate a rework in how spot Bitcoin (BTC) and Ethereum (ETH) ETFs are structured. Each firm is seeking to move from a cash-based model to an in-kind creation and redemption mechanism. Formal rule change notices were published separately on Jul. 22, initiating a public comment period. Under the existing cash-only model, introduced when spot Bitcoin ETFs were first approved in January 2024, ETF issuers are required to manage transactions through fiat conversions. The current approach has been criticized by market participants for raising trading costs and creating misalignment with underlying spot prices. The in-kind model, by contrast, would allow authorized participants to transfer actual crypto assets in or out of the fund in exchange for ETF shares. Similar structures are already in use…
The post Bitcoin ETF design enters transition phase as industry rethinks operational foundations appeared on BitcoinEthereumNews.com.
Can the push for in-kind design solve the operational mismatches that have long kept Bitcoin ETFs from functioning like the traditional funds they aim to replicate? Summary In late July, five major ETF providers including Fidelity, Ark 21Shares, and VanEck submitted filings to shift their Bitcoin and Ethereum ETFs from a cash-only model to in-kind creation and redemption. The SEC has started to show a more flexible stance, releasing a detailed framework that sets expectations around custody, disclosures, and risk, while also exploring faster approval timelines. In-kind structures would allow direct transfers of crypto between issuers and authorized participants, cutting trading costs, improving tax efficiency, and keeping ETF prices more closely aligned with the spot market. If the changes go through, US-listed crypto ETFs could start operating more like their global counterparts, with better infrastructure for institutional use. Bitcoin ETF giants push for a cleaner crypto swap model Late July 2025 saw five major exchange-traded fund providers, Ark 21Shares, Fidelity, Invesco Galaxy, VanEck, and WisdomTree, submit coordinated amendments to the SEC and Cboe BZX Exchange. The filings advocate a rework in how spot Bitcoin (BTC) and Ethereum (ETH) ETFs are structured. Each firm is seeking to move from a cash-based model to an in-kind creation and redemption mechanism. Formal rule change notices were published separately on Jul. 22, initiating a public comment period. Under the existing cash-only model, introduced when spot Bitcoin ETFs were first approved in January 2024, ETF issuers are required to manage transactions through fiat conversions. The current approach has been criticized by market participants for raising trading costs and creating misalignment with underlying spot prices. The in-kind model, by contrast, would allow authorized participants to transfer actual crypto assets in or out of the fund in exchange for ETF shares. Similar structures are already in use…
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