The SEC’s approval marks a key milestone for bitcoin and ether ETPs, bringing their creation and redemption processes in line with those of traditional-asset ETFs and ETPs.
Bitwise Asset Management, the global crypto asset manager with over $10 billion in client assets, announced that the Bitwise Bitcoin ETF and the Bitwise Ethereum ETF will now offer in-kind creation and redemption of shares by the funds’ authorized participants. The SEC’s recent approval paves the way for greater trading efficiencies that could ultimately lower trading costs for investors in Bitwise’s spot crypto ETPs.
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Until now, new shares of spot crypto ETPs in the U.S. could only be created or redeemed when authorized participants (APs) large institutions that help regulate the supply and demand of ETP shares exchanged U.S. dollars for shares of the fund. Following regulatory approval, APs can now deliver or receive bitcoin or ether in exchange for shares, a change that could contribute to tighter bid-ask spreads and reduce tax exposure. Already , the Bitwise ETPs have among the lowest management fees, highest trading volumes, and tightest bid/ask spreads in the market—advantages that in-kind functionality could further enhance.
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Because the approval of in-kind transactions applies only to authorized participants, individual investors in BITB and ETHW will not see any direct changes in how they access the funds.
“It might seem like esoteric news, but this approval is significant,” said Matt Hougan, Chief Investment Officer at Bitwise. “Part of the genius of ETFs and ETPs historically is how they’ve incentivized APs to help funds trade more efficiently, but for the past several years, the cash-only mechanism meant crypto ETPs couldn’t achieve the efficiency that traditional-asset products enjoy. In-kind creation is one of the final structural pieces that spot crypto ETPs need to reach their full potential as a mainstream investment. With this approval, crypto ETPs can unlock new tax efficiencies, tighter spreads, and new cost savings. That’s great news for investors.”
The approval marks another step forward in the U.S. integration of crypto assets into mainstream financial markets. “This is more than an operational milestone; it is a breakthrough for crypto’s role in the global financial system,” said Teddy Fusaro, President at Bitwise. “In-kind creation is how the most trusted ETFs and ETPs in the world are built. With this approval, crypto ETPs move onto that same foundation, bringing them in line with the design that institutions trust most. It’s one more sign that crypto is becoming a lasting part of modern portfolios. We’re proud to play a role in building that bridge.”
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The Bitwise Bitcoin ETF (BITB) and the Bitwise Ethereum ETF (ETHW) (each, a “Fund” and together the “Funds”) are not suitable for all investors. An investment in either Fund is subject to a high degree of risk, has the potential for significant volatility, and could result in significant or complete loss of investment. BITB and ETHW are not investment companies registered under the Investment Company Act of 1940 (the “1940 Act”). As a result, shareholders of BITB or ETHW do not have the protections associated with mutual funds or ETFs registered under the 1940 Act.
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Source : businesswire