Chiara Bianchi
The U.S. Securities and Exchange Commission (SEC) is once again evaluating a proposed rule modification — this time focused on allowing in-kind creations and redemptions for the WisdomTree Bitcoin Fund (BTCW).
This request for feedback comes amid growing discussions around the structure of spot Bitcoin ETFs, and follows previous delays involving other major funds such as BlackRock’s iShares Bitcoin Trust (IBIT) and the VanEck Bitcoin and Ethereum Trusts.
SEC Opens a 21-Day Comment Window
According to a Monday release from the agency, the SEC has officially opened a 21-day public comment period, inviting investors, institutions, and experts to submit their opinions, data, or legal perspectives on whether the proposed rule change should be approved or denied.
“Institution of proceedings is appropriate at this time,” the SEC stated, pointing to the complex legal and policy issues raised by the proposal. However, the Commission emphasized that initiating proceedings does not mean a decision has been made. Instead, the move aims to encourage open participation from the public before a final determination is reached.
What Are In-Kind Redemptions — and Why They Matter
The WisdomTree Bitcoin Fund, launched in January 2024, is a spot Bitcoin ETF, meaning it is backed by actual Bitcoin rather than derivatives or futures contracts.
In-kind redemptions allow investors to redeem their shares for the underlying asset (bitcoin) instead of receiving cash. This mechanism is commonly used in traditional ETFs to improve tax efficiency and reduce trading costs. If approved, it could make crypto ETFs more institutionally attractive and operationally efficient, potentially accelerating adoption.
Industry Eyes SEC’s Next Move
This is not the first time the SEC has been asked to consider rule updates for crypto ETFs, but so far, the Commission has been cautious. Now, with increasing market maturity and demand for more flexible redemption structures, industry players are closely watching how the SEC handles WisdomTree’s request.
Should the Commission greenlight in-kind transactions, it could pave the way for broader ETF innovation and set a precedent for other crypto funds waiting on similar decisions.
