Cboe BZX Exchange will file proposed rules changes with the US Securities and Exchange Commission (SEC) on behalf of Inveso Galaxy, allowing redemption of its Spot Bitcoin ETF and Ethereum ETF shares.
Redemption and creation of physical institutions allow direct exchange of assets underlying ETFs (Bitcoin or Ethereum) in ETF stocks, avoiding the need for cash.
This method eliminates the need for participants to sell the underlying code to create stocks, reduces the expansion of bids/questions, and avoids additional broker committees.
The proposal, published Thursday morning, pushes the boundaries of US crypto ETFs and opens new pathways for investors to take advantage of it Bitcoin (BTC) Ethereum (eth) Without physically retaining assets.
When the SEC reviewed changes to CBOE’s proposed rules, a public comment period was opened, allowing stakeholders to share their thoughts before a final decision was made.
Approved participants are involved in the creation and reimbursement process and are eligible to use the in-kind transaction model, Filing says.
Individual investors must use a cash-based model when purchasing or redeeming ETF shares.
Investco Galaxy filing reflects similar moves by leading ETF providers, including BlackRock.
In related tweets, Bloomberg ETF analyst James Seyffart noted in January that in-kind work and redemption could help “rationalize” the ETF market.
oh. If there are too many questions, these things are deep in the weeds. So I keep it high and say, “What does this mean?”
Not much for individual retail investors. The main meaning is that ETFs need to trade more efficiently than they already do. pic.twitter.com/lwyskmo5sh
– James Seyfert (@jseyff) January 24, 2025
Analysts shared the images used to advocate for Spot Bitcoin ETF transactions at the November 2023 SEC meeting, while explaining that there are fewer steps and parties involved in the process.
“In my opinion, ETFs should have been allowed to do this from the start, but the DEM Sec commissioners were against it,” Seyffart said.
Bitcoin ETFs face challenges
Last January, the SEC approved the Invesco Galaxy Bitcoin ETF, making history as one of the first spot Bitcoin ETFs listed on US exchanges.
After approval of its Bitcoin counterpart, the SEC granted approval for the Invesco Galaxy Ethereum ETF in May last year.
Like Bitcoin ETFs, Ethereum is held as an underlying asset, allowing stocks to be traded on regulated exchanges.
Still, both Bitcoin and Ethereum ETFs face recent challenges.
On Tuesday, Bitcoin ETF retreated $371 million, completed a $371 million withdrawal and experienced a $371 million withdrawal, according to data from Farside Investor, a UK-based investment management company.
The Ethereum ETF was similarly affected, with the outflow of $21.57 million, extending its winning streak to five days.
