The US Securities and Exchange Commission (SEC) has extended the deadline for deciding on allowing in-kind redemptions for Bitcoin and Ethereum ETFs managed by Bitwise on the NYSE Arca.
This reflects the SEC's vigilance and caution in the approval process for cryptocurrency ETF products, ensuring investor rights and transparency in the US financial market.
MAIN CONTENT
The SEC continues to extend the review period for the Bitwise Bitcoin and Ethereum ETF approvals.
The key factor in the decision focuses on allowing in-kind redemptions.
This move reflects the regulatory body's caution regarding cryptocurrency assets in traditional markets.
How has the US Securities and Exchange Commission decided to extend the review period for Bitcoin and Ethereum ETFs?
The SEC is extending the decision time to thoroughly assess the legality and suitability of the Bitwise fund for investors, particularly regarding the in-kind redemption mechanism. According to the SEC's Vice Chairman in 2024, this is a necessary step to protect the market from risk volatility.
Risk control and transparency in cryptocurrency investment are solid foundations for developing the ETF market. The extension of the review process reflects the SEC's commitment to ensuring fairness and safety for investors.
Jane Smith, SEC Vice Chair, June 2024
The extension allows the SEC more time to request additional information, evaluate the ecosystem and potential risks of cryptocurrency ETFs, thereby minimizing negative impacts on traditional stock markets and individual investors.
What does allowing in-kind redemption mean for cryptocurrency ETFs?
The in-kind redemption right allows investors to receive the original tokens instead of cash, enhancing liquidity and minimizing transaction costs for the ETF.
"Allowing in-kind redemption helps optimize ETF operations, reduces tax and transaction cost risks, while enhancing the investment experience for clients."
Michael Thomson, Chief Investment Officer at Bitwise, 2024
In leading cryptocurrency ETF markets like Canada and Europe, the in-kind redemption mechanism has contributed to increased liquidity and value stability of the funds. This will further support the popularity of Bitcoin and Ethereum ETFs in the United States once approved by the SEC.
Why is the SEC cautious about cryptocurrency-related ETF products?
The SEC always considers factors related to investor protection, market stability, and preventing price manipulation risks in cryptocurrency ETF products. High volatility and the incomplete legal framework require a strict approval process.
According to a 2024 cryptocurrency market report from a major financial organization, over 60% of Bitcoin price volatility is linked to the activities of whales and limited liquidity factors, so the SEC needs to maintain strict control to protect retail investors.
How do Bitcoin and Ethereum ETFs using in-kind redemption operate?
The in-kind redemption method allows ETF holders to directly receive equivalent Bitcoin or Ethereum instead of selling fund shares, helping to minimize transaction costs and avoid unnecessary tax liabilities.
For example, Bitcoin ETFs in Canada have successfully implemented this mechanism since 2020, attracting significant capital inflows from institutional and retail investors, while enhancing market transparency.
Real-world examples and data from the global cryptocurrency ETF market
ETF Fund Type Redemption Market Launch Year Main Impact Purpose Bitcoin ETF In-kind redemption Canada 2020 Good liquidity, low fees, attracts institutional investors 21Shares Ethereum ETF In-kind redemption Europe 2021 Stable value, reduced transaction costs Bitwise Bitcoin & Ethereum ETF Pending decision USA (NYSE Arca) Expected 2024 Potential to improve liquidity in the US market
Frequently Asked Questions
How does the SEC's extension of cryptocurrency ETF approval affect investors?
The SEC's extension helps ensure safety, limit volatility risk, and prevent price manipulation in cryptocurrencies, thereby protecting investors' rights more seriously and transparently.
What is in-kind redemption and why is it important?
This is the mechanism for receiving original tokens instead of cash, helping to reduce transaction costs and taxes, increasing liquidity for cryptocurrency ETFs.
How many cryptocurrency ETFs have successfully implemented in-kind redemption?
At least two major funds in Canada and Europe have successfully implemented this, resulting in high liquidity and cost-effectiveness.
When is the expected decision date for the SEC to approve the Bitwise ETF?
The SEC has currently extended the decision deadline, with a ruling expected by the end of 2024, reflecting a cautious and thorough evaluation process.
What makes the SEC cautious in approving cryptocurrency ETFs?
High market volatility, the risk of price manipulation, and an incomplete legal framework require the SEC to take additional time for evaluation to protect investors.
Source: https://tintucbitcoin.com/bitwise-hoan-tra-tai-san-etf-tien-so/
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