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BlackRock files a request with the U.S. Securities and Exchange Commission (SEC) to recover in-kind funds for its Ethereum exchange-traded fund (ETF): What this means for Ethereum

Date: May 12, 2025

BlackRock has submitted a revised S-1 filing to the U.S. Securities and Exchange Commission, proposing the inclusion of in-kind creation and redemption for the iShares Ethereum Trust ETF, ETHA.

James Sivart, Bloomberg's lead analyst for exchange-traded funds, was the first to share details of this filing on X, confirming that the asset manager took this step on May 9. He revealed that the amended filing now includes language permitting in-kind redemptions once approved by the SEC.

BlackRock seeks to recover in-kind funds: What does that mean?

Sivart, along with his Bloomberg analyst colleague Eric Balchunas, expects the agency to approve in-kind financing operations sometime in 2025. Notably, the deadline for the U.S. Securities and Exchange Commission to issue its ruling on this request is November 10, 2025.

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BlackRock Amendment James Sivart

BlackRock S-1 Amendment | James Sivart

For beginners, in-kind redemptions represent a significant advantage for many institutions. Instead of redeeming ETF shares for cash, authorized participants will be able to exchange shares directly for the underlying asset, which in this case is Ethereum (ETH).

This model could lead to reduced transaction costs, lower taxable events, and even greater operational flexibility, all of which are particularly beneficial in cryptocurrency markets.

BlackRock also wants to include temporary storage in its Ethereum exchange-traded fund

While this latest filing focuses on redemptions, BlackRock is also actively communicating with the U.S. Securities and Exchange Commission (SEC) regarding another pivotal issue: temporary storage. According to internal discussions with the SEC's cryptocurrency task force, BlackRock is striving to include ETHA with temporary storage features.

Robert Michnik, head of the company's digital asset division, pointed out that temporary storage is an important part of Ethereum's investment appeal. Michnik argues that excluding temporary storage from exchange-traded Ethereum funds overlooks a significant portion of potential returns, thus limiting the appeal of these products to investors.

Although the U.S. Securities and Exchange Commission has not yet approved the storage process, discussions are still ongoing. Sivart previously indicated in April 2025 that while early approval of the storage process is possible, a final decision is expected by late October, with the possibility of temporary stages in May and August.

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The BlackRock Ethereum exchange-traded fund is performing well

Meanwhile, amid these regulatory developments, Ethereum's market performance continues to gain momentum. According to Susovalio, on May 9, 2025, the fund recorded net inflows of $17.61 million, making it the only exchange-traded Ethereum fund among nine traded in the U.S. that achieved positive flows that day.

This followed net outflows of $21.77 million on May 7, and zero flows on May 8. The two active trading days, May 7 and 9, were the only sessions that saw movement over the past week, while the remaining days experienced no net activity. Essentially, the exchange-traded fund has gathered net incoming flows of $15.94 million for May so far.

As of May 9, the total net inflows since the fund's inception in July 2024 stood at approximately $4.2 billion, with net assets totaling $2.93 billion. Despite weekly flow volatility, the ETHA fund closed April with net inflows of $108.19 million.

Interestingly, since its launch, the fund has only experienced one month of net outflows, which occurred in March 2025 when it saw withdrawals of $200.81 million.

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Disclaimer: This content is informational and should not be considered financial advice.