SEC Flirts With Bitcoin ETFs: Will Redemptions Be In-Kind or Not? đŸ€”

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Sorry, investors! Your Bitcoin dreams might finally get in-kind redemptions, if the SEC stop meddling. 🌟

Pro-crypto SEC Commissioner Hester Peirce, who seems to have as much patience as a cat in a bath, announced that the agency is *considering* in-kind redemptions for Bitcoin ETFs. Because nothing says “trust me” like a government agency teasing a change. Bitcoin

The SEC initially threw open the gates for Bitcoin ETFs in early 2024 — sort of like a dad reluctantly giving his teenager the keys to the car. Just as everyone was getting excited, BlackRock, the financial equivalent of that kid who’s always bragging about their new sneakers, caved and agreed to exclude in-kind redemptions, kowtowing to the regulator’s demands. Classic. BlackRock logo

If in-kind redemptions *finally* happen, investors could receive the real deal—actual Bitcoin—instead of the boring old cash. Because who wants cash when you can have what amounts to a digital ‘get out of jail free’ card? It’s supposed to make everything run smoother, like placing a pleased cat in a sunlight patch. Authorized participants could exchange ETF shares directly for Bitcoin, thus avoiding the headache-inducing tax maze. Tax maze

Right now, the “in-cash” model is the sad, clunky cousin that requires ETF issuers to handle Bitcoin conversions themselves. It’s about as streamlined as a 1980s VCR—technologically outdated and prone to bugs. Plus, selling Bitcoin to cover redemptions can turn into a taxable event, which is just the government’s way of saying, “Thanks for your hard work, now give me some of that money.”

Earlier this year, bold ETF issuers—probably fueled by too much coffee—pitched ideas to let investors do in-kind redemptions. BlackRock, ever the overachiever, filed a proposal with the Nasdaq in January 2025, because what could go wrong when billionaires play with tax rules? BlackRock Proposal

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2025-06-03 09:30