Pro-crypto SEC Commissioner Hester Peirce has stated that the agency would consider in-kind redemptions for Bitcoin exchange-traded funds.
The SEC initially approved Bitcoin ETFs in early 2024. On the verge of the approval, BlackRock agreed to exclude in-kind redemptions, caving to a key demand from the regulator.
If in-kind redemptions are allowed, investors would be able to receive the actual underlying asset instead of cash. This model is considered to be more streamlined since authorized participants would be able to exchange ETF shares directly for Bitcoin.
The current "in-cash" model requires ETF issuers to handle Bitcoin conversions themselves. Such an approach is viewed as less streamlined due to operational difficulties and tax complexities. Selling Bitcoin to meet redemption requests could trigger taxable events.
Earlier this year, major ETF issuers came up with several proposals to allow in-kind redemptions. BlackRock filed such a proposal with the Nasdaq in January 2025.
