BlackRock's Ether ETF Gets Key SEC Acknowlegement

SEC Acknowledges In-Kind Redemption for BlackRock's Ethereum ETF

The U.S. Securities and Exchange Commission (SEC) has officially recognized the proposal for in-kind redemption in BlackRock's spot-based Ethereum exchange-traded fund (ETF). While this indicates the regulator is currently considering the proposal, there is no guarantee it will be approved.

This move by the SEC mirrors its previous actions regarding spot Bitcoin ETFs in January. Furthermore, the regulator recently delayed its decision on in-kind redemptions for BlackRock's successful Bitcoin ETF.

Notably, on the same day, BlackRock filed to allow in-kind redemptions for its spot Ethereum ETF. This model would enable the fund to provide investors with the actual underlying assets, instead of cash, when they sell their shares. The in-kind redemption approach is considered more streamlined compared to the in-cash model, potentially leading to increased efficiency for these ETF products.

It's important to note that only authorized participants will be able to perform in-kind redemptions. Back in December 2023, as spot Bitcoin ETFs were on the verge of approval, BlackRock had to comply with the SEC's demands to exclude in-kind redemptions from their ETF product, which also applies to the Ethereum-based offering.

Following the departure of former SEC Commissioner Gary Gensler, Commissioner Hester Peirce has expressed openness to reconsidering in-kind redemptions. She emphasized the agency's focus on allowing issuers to design products in a way that would be most beneficial for investors.