Cboe Files Amended Application for Bitcoin and Ethereum ETFs
Cboe has recently filed an amended application with the US Securities and Exchange Commission (SEC) to make changes to the operational rules for two exchange-traded funds (ETFs) – Ark21 Shares Bitcoin ETF (ARKB) and 21Shares Core Ethereum (CETH).
Introduction of In-Kind Creations and Redemptions
In the filing made on Jan. 27, Cboe has proposed to introduce in-kind creations and redemptions for ARKB and CETH ETFs. The US equities market operator aims to allow in-kind creations and redemptions for Bitcoin and Ethereum ETP shares through this amendment.
“The Exchange proposes to amend several portions of the Exchange’s previous rule filing to list and trade Bitcoin ETP [and ETH ETP] Shares in order to permit in-kind creations and redemptions.”
Potential Benefits of the Proposed Method
If approved, the changes would enable the ETFs to process investor redemptions using the underlying digital assets. This feature would only be available to authorized participants. This method is seen as a way to avoid the need to sell holdings for cash redemptions, potentially reducing tax burdens and improving market liquidity for these funds.
The current standard favored by the SEC involves cash-based redemptions, which can lead to increased operational costs and tax inefficiencies when converting crypto to cash during withdrawals.
Growing Interest in Crypto-Related Products
Cboe’s proposal aligns with Nasdaq’s recent application for BlackRock’s iShares Bitcoin ETF (IBIT). The timing of these proposals indicates a growing interest from institutional players in crypto-related products as the SEC is expected to reevaluate its stance on these products under the new administration.
Leveraged Crypto ETFs
Simultaneously, Tuttle Capital has submitted applications for leveraged ETFs targeting 10 cryptocurrencies, including XRP, Cardano, Polkadot, and Chainlink. The proposed ETFs aim to deliver 2x leverage and double the daily returns—or losses—of the underlying assets, catering to investors seeking short-term gains through amplified exposure.
The application also covers assets like Solana, Litecoin, and novelty tokens such as TRUMP and MELANIA, representing President Donald Trump and his wife.
If approved, this would mark the first ETF offering for Cardano, Polkadot, and Chainlink, providing investors with new opportunities for exposure to these assets.
Expected Debut of Proposed Products
Bloomberg ETF analyst Eric Balchunas has pointed out that these proposed products could potentially debut as early as April unless the SEC intervenes, signaling a potential shift in the landscape of crypto-related ETF offerings in the near future.