Key Takeaways
- The SEC has delayed its verdict on in-kind creations and redemptions for BlackRock’s proposed spot Ethereum ETF.
- BlackRock’s ETF would enable share creation and redemption using Ethereum tokens directly, pending regulatory approval.
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The SEC has extended its timeline to rule on Nasdaq’s proposal to enable BlackRock’s spot Ethereum, the iShares Ethereum Trust (ETHA), to offer in-kind creations and redemptions, according to a new filing.
The in-kind model under SEC review, which mirrors traditional commodity ETF mechanics, would allow Authorized Participants (APs) to transfer Ethereum (ETH) directly, replacing the current cash-based creation and redemption process to reduce slippage and simplify operations.
In practice, APs would be able to deliver actual Ether to the ETF issuer in exchange for new shares, and redeem shares to receive Ether back, rather than settling them in cash.
BlackRock submitted an amended S-1 registration statement to the SEC in May, seeking approval to allow in-kind creations and redemptions for its ETHA fund. The asset manager is also awaiting a regulatory decision on a similar in-kind model for its iShares Bitcoin Trust (IBIT).
Other fund managers, including 21Shares, Fidelity, WisdomTree, Bitwise, and VanEck, have also filed to enable in-kind creation and redemption for their crypto ETFs.
SEC Commissioner Hester Peirce has previously said that in-kind creations and redemptions for crypto ETFs are “definitely coming at some point.”
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