BlackRock Pushes For In-Kind Creation And Redemption For Ethereum ETF

Fund manager BlackRock is seeking to amend key areas of the S-1 filing for its iShares Ethereum Trust ($ETHA). According to an X post

BlackRock has filed for an amendment of its spot Ethereum ETF to allow an in-kind creation and redemption process. The filings come after a meeting with the US Securities and Exchange Commission’s (SEC) Crypto Task Force and renewed institutional interest in Ethereum.

BlackRock Pushes For In-Kind Creation And Redemption For Ethereum ETF

Fund manager BlackRock is seeking to alter key areas of the S-1 filing for its iShares Ethereum Trust ($ETHA). According to an X post by Bloomberg analyst James Seyffart, BlackRock’s latest filing with the SEC is an attempt to allow in-kind creation and redemption for the spot Ethereum ETF.

If approved, the move will permit authorized participants to exchange ETH for ETF shares during creation and redemption. A crucial aspect of BlackRock’s filing is the intention to sidestep the use of cash for the creation and redemption process.

“This post-effective amendment No 1 to Form S-1 is being filed bny the registrant to disclose that the Trust may allow for an in-kind creation and redemption process as an alternative to the Trust’s current cash creation and redemption process,” the filing stated.

The iShares Ethereum Trust will also provide authorized participants with the benefit of avoiding capital gains tax as there is no need to sell ETH for cash.

The in-kind creation and redemption in the Ethereum ETF will improve ETH price tracking while reducing trading fees.

Furthermore, BlackRock is aiming to incorporate by reference and insert information from its Annual Report in its registration statement. The filings follow BlackRock’s meeting with the SEC to discuss key topics revolving around staking tokenization and options on crypto ETPs.

The meeting also covered the role of the DeFi protocols in the Build Back Better agenda for the US economy.

The filings come after a period of renewed interest in Ethereum from institutions. A report by Glassnode shows that the total amount of ETH held by DeFi protocols hit a record high of 20.7 million on August 21.

At the same time, the deposits to centralized exchanges have fallen to their lowest levels since November 2020. The combination of factors suggests that institutional interest in the asset class is surging.

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