SEC's Hester Peirce says in-kind redemptions for crypto ETFs are 'on the horizon'

In-kind redemptions for crypto exchange-traded funds could be coming, according to one of the U.S. Securities and Exchange Commission's top leads, Hester Peirce.

Republican Commissioner Peirce was asked on Wednesday during a panel at the Bitcoin Policy Institute whether the SEC would sign off on in-kind creation and redemptions and if that "was on the horizon." Firms, including BlackRock, have been asking the agency for months to allow for in-kind creations and redemptions for bitcoin ETFs specifically, instead of having to use cash.

Nasdaq, on behalf of BlackRock, filed a Form 19b-4 in January for that change, and others have since followed.

"Those (forms) are going through the process now," Peirce said. "So I think that's something that's certainly on the horizon at some point. I can't prejudge, but we hear that there's a lot of interest."

Ahead of the SEC's approvals for spot bitcoin ETFs over a year ago, firms were hashing out technical details over how the redemption process would work for such products. The SEC favored a cash model that required firms like BlackRock to move bitcoin out of storage, sell it right away, and then give the cash back to the investor.

James Seyffart, Bloomberg Intelligence ETF analyst, previously said in January that allowing that mechanism would allow funds to trade more efficiently.

The SEC under the Trump administration has taken a friendlier approach to crypto when compared to the previous Biden administration. Since the change in administration, firms have looked to get the agency's sign-off for an array of crypto ETFs, from ones tracking XRP to SOL to DOGE. Seyffart, alongside Bloomberg senior ETF analyst Eric Balchuna,s raised the odds of the SEC approving the majority of spot crypto ETF filings to 90% or above.