The Cboe BZX exchange has decided to make a major change to the market of cryptocurrency ETFs to make them more convenient and profitable for investors. To do this, they turned to the SEC (the U.S. Securities and Exchange Commission) with a proposal to allow transactions in the so-called in-kind.

But what does it mean? Currently, money is used to create or redeem shares of ETFs. For example, to issue shares of a bitcoin ETF, you need to transfer money to the issuer, not the bitcoins themselves. Cboe suggests simplifying the process: authorized participants (AP) will provide bitcoin or ether themselves instead of cash. In exchange, they will receive shares of the ETF. If the investor decides to repay the shares, he will receive cryptocurrency, not money.

This is important because:

Costs are reduced. Unnecessary steps in the process are removed, which reduces transaction costs.

Taxes are being cut. Exchanging assets (for example, bitcoins) instead of selling them avoids additional tax obligations.

Communication with the underlying assets is improving. The share price of ETFs will be even closer to the value of the cryptocurrencies they represent.

This idea is already working successfully in traditional ETFs (for example, stocks or commodities), and experts such as Bloomberg analyst James Seyffart are confident that crypto-ETFs will also become more effective.

For example, Bitcoin-ETF ARK 21Shares (ARKB) and Ethereum-ETF 21Shares Core (CETH) already occupy leading positions in the market. ARKB is one of the four largest Bitcoin ETFs with assets of $5.10 billion, while CETH ranks eighth among Ethereum ETFs.

If the SEC approves this initiative, it will be a significant step for the cryptocurrency ETF industry. Investors will benefit more, and crypto assets will gain an even stronger foothold in traditional finance.

Do you think this step could attract more major investors in cryptocurrencies and what does it mean for the future market?

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