Cboe has filed an amended application with the US Securities and Exchange Commission (SEC) to adjust the operational rules for Ark21 Shares Bitcoin ETF (ARKB) and 21Shares Core Ethereum (CETH) exchange-traded funds (ETFs).
According to the Jan. 27 filing, the US equities market operator has proposed introducing in-kind creations and redemptions for these funds. It stated:
“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.”
If approved, the changes would allow the ETFs to process investor redemptions using the underlying digital assets. This feature would be restricted to authorized participants alone.
The SEC currently favors cash-based redemptions, which require converting the crypto to cash during withdrawals. This process can increase operational costs and tax inefficiencies.
Cboe's proposal challenges this standard, arguing that its proposed method avoids the need to sell holdings for cash redemptions. According to the firm, this could potentially reduce tax burdens and improve market liquidity for these funds.
Meanwhile, the filing aligns with Nasdaq's recent application for BlackRock's iShares Bitcoin ETF (IBIT). Market observers have pointed out that the timing of these proposals suggests growing interest from institutional players as the SEC is expected to revisit its stance on crypto-related products under the new administration.
Leveraged crypto ETFs
Cboe's filing comes as Tuttle Capital submitted applications for leveraged ETFs targeting 10 cryptocurrencies, including XRP, Cardano, Polkadot, and Chainlink.
The application also covers other assets like Solana, Litecoin, and novelty tokens such as the recently introduced memecoins of President Donald Trump and his wife, Melania Trump—TRUMP and MELANIA.
The proposed ETFs aim to deliver 2x leverage and double the underlying assets' daily returns—or losses. This structure caters to investors seeking short-term gains through amplified exposure.
If approved, this would mark the first ETF offering for Cardano, Polkadot, and Chainlink.
Bloomberg ETF analyst Eric Balchunas pointed out that these proposed products could debut as early as April unless the SEC intervenes.
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