TLDR
- Five major issuers, Ark 21, VanEck, Invesco, WisdomTree, and Fidelity, have filed amendments with the SEC for in-kind features.
- The amendments request approval to allow in-kind creation and redemption in their crypto ETFs.
- Bloomberg analyst James Seyffart sees these filings as a sign of increasing coordination and regulatory progress with the SEC.
- In-kind transactions enable asset exchange without converting to cash, offering potential tax and operational benefits.
- Only authorized participants like market makers and financial institutions can access in-kind creation and redemption features.
Five issuers have filed amendments with the U.S. SEC to include in-kind creation and redemption in crypto ETFs. These filings signal potential regulatory approval for the sought-after feature, which enables direct asset exchanges without cash. This development comes as analysts point to increasing activity and coordination between issuers and the SEC.
Crypto ETFs Issuers Seek In-Kind Approval
Five crypto ETF issuers on the CBOE Ark 21, VanEck, Invesco, WisdomTree, and Fidelity have submitted updated filings. These amendments request regulatory clearance for in-kind creations and redemptions, which allow transferring crypto assets directly instead of using cash. Bloomberg’s James Seyffart emphasized that this movement suggested coordination and progress with the SEC.
NEW: More positive signs regarding Bitcoin & Ethereum ETFs obtaining the ability to do in-kind creation and redemption
5 different funds on CBOE filed amendments with the SEC. This indicates to me that there is positive movement and likely fine tuning happening with the SEC pic.twitter.com/Xw0Z7SbYwj
— James Seyffart (@JSeyff) July 22, 2025
In April, the SEC delayed VanEck’s request for in-kind features, hinting at its earlier reluctance. However, the latest group filings may reflect a shift in the Commission’s position toward crypto ETFs. The updated documents are seen as refinements and reflect increased engagement between issuers and regulators.
In-kind features could improve operational efficiency and reduce capital gains tax exposure since assets are not liquidated during transactions. Only authorized participants, such as major financial firms, can use these features to exchange ETF shares with underlying crypto. Retail investors would not directly engage in these in-kind transactions.
Bitcoin and Ethereum ETFs May Benefit From Approval
If granted, the in-kind feature would primarily benefit Bitcoin and Ethereum crypto ETFs with increased efficiency and reduced trading frictions. Analysts believe this model aligns better with traditional financial infrastructure and lowers costs for large institutional players. Seyffart pointed out that the current ETFs already function efficiently, but enhancements are still valuable.
Institutional investors would gain more streamlined mechanisms for entering and exiting crypto ETF positions without triggering taxable events. This setup closely mirrors traditional commodity ETFs, where in-kind creation is common. Such similarities ease regulatory acceptance and foster greater confidence in the structure.
Though the in-kind method will not directly affect individual investors, the broader ETF ecosystem could benefit from smoother flows. Improved liquidity and tax efficiencies may indirectly strengthen the performance and appeal of crypto ETFs. Issuers appear to be preparing for future adoption by aligning their offerings with regulatory expectations.
More Issuers Pursue Staking Options Alongside In-Kind Models
In addition to the in-kind proposals, several crypto ETF providers are seeking SEC approval to include staking features in their funds. BlackRock has recently filed to incorporate Ethereum staking, joining other firms that are exploring similar enhancements to fund performance. This signals a broader trend among asset managers to diversify crypto ETF offerings.
Staking would enable funds to earn rewards from network participation while maintaining ETF exposure to Ethereum. If approved, staking could open additional yield opportunities for institutional holders within crypto ETFs. This may encourage further institutional adoption and long-term participation in the space.
