Cboe has submitted amendments for five crypto-related exchange-traded funds (ETFs) that would allow authorized participants to create and redeem shares in-kind, which is a positive sign for the approval of such funds.

Bloomberg ETF analyst James Seyffart shared on July 22 a screenshot of the exchanges’ docket showing the amended rule filings. The amendments relate to issuers ARK 21Shares, VanEck, Fidelity, WisdomTree, and Invesco Galaxy.

Seyffart described the cluster of filings as a “positive” signal that the Securities and Exchange Commission (SEC) is working with issuers to finalize an in-kind framework rather than resisting it. He characterized the process as fine-tuning, not stonewalling.

In-kind redemptions enable investors to exchange Bitcoin (BTC) or Ethereum (ETH) for the underlying assets, rather than cash, and receive them upon redemption.

Not noticeable by the retail

Seyffart also addressed a recurring misconception. The shift to in-kind would not let retail investors swap ETF shares for Bitcoin or Ethereum directly. 

Only authorized participants, such as large Wall Street firms and market makers, would be responsible for handling those transfers. For most investors, nothing will appear different on the screen because existing spot Bitcoin ETFs already trade closely to their net asset value.

The benefit is then structural, as crypto ETPs would be treated the same way as commodity and equity products that commonly use in-kind flows, enhancing tax efficiency and lowering friction inside the fund.

If the Commission signs off, authorized participants will be able to move crypto directly instead of sourcing or unwinding large cash positions each time they create or redeem baskets. 

That change could reduce spreads and hedging costs, especially in volatile markets, and give issuers more flexibility in portfolio management. 

Although retail wouldn’t notice the changes directly, smoother primary-market plumbing tends to reinforce secondary-market efficiency.

Long queue

The latest Cboe batch joins a growing queue of filings that either request or contemplate in-kind flexibility. 

Nasdaq has already requested that BlackRock’s iShares Bitcoin Trust be converted to in-kind creations and redemptions, following language in the trust’s January 2024 S-1 that stated the sponsor could make the switch once regulators approved. 

A Federal Register notice in late May also described full in-kind mechanics for an Ethereum trust on Nasdaq, detailing how APs would deliver or receive ether. 

NYSE Arca hosts Bitwise’s Bitcoin and Ethereum ETFs, which from the outset proposed pure in-kind baskets. 

Collectively, these filings form the pending docket the SEC must clear before any fund can move away from the cash-only model imposed at launch.

Mentioned in this article

The United States Securities and Exchange Commission (SEC) extended its deadline for ruling on in-kind redemptions for two separate crypto exchange-traded funds (ETFs).

According to a Wednesday SEC filing, the regulator will take more time to decide whether to allow in-kind redemptions on NYSE Arca for Bitwise’s Bitcoin (BTC) and Ether (ETH) spot ETFs. The time limit for the decision was extended, but the underlying limit remains “45 days, extendable to no more than 90.”

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change, and the issues raised therein,” the announcement read.

In-kind redemptions would allow investors to redeem ETFs for the underlying assets directly, in this case, Bitcoin or Ether.

This could have tax implications, as assets would be redeemed in-kind rather than liquidated for cash.

Related: US regulator considers simplified path to market for crypto ETFs

SEC accused of foot-dragging

This deadline extension is far from the first one by the SEC when it comes to crypto-relevant decisions. Earlier this month, attorneys for digital asset manager Grayscale pushed back against the US SEC’s delay in approving its Digital Large Cap ETF.

The SEC had previously approved the product, but the regulator’s Office of the Secretary decided to review the action shortly thereafter and halted the decision. According to Grayscale’s attorneys, this violated the “statutory approval or disapproval deadline” and conflicted with established procedure.

Related: First US staking ETF to launch Wednesday, giving investors exposure to Solana

SEC changes approach to crypto

Despite the ongoing conflicts, most agree that since the Trump administration took power in Washington and SEC Chair Paul Atkins assumed the position previously held by Gary Gensler, the regulator’s stance toward crypto has changed significantly.

Earlier this month, Atkins said that the regulator now sees tokenization as an “innovation” to be encouraged in the marketplace. He also highlighted how his approach differs from his predecessor’s, noting that the SEC had previously hindered innovation through vague laws and “regulation through enforcement,” before adding:

“That day is over.”

Atkins said that his goal when it comes to crypto rules is regulatory transparency and establishing a foundation that allows for innovation and new products.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered

]]> https://earlybirdsinvest.com/sec-delays-in-kind-redemption-decision-for-bitwise-crypto-etfs/feed/ 0 48145 https://earlybirdsinvest.com/cannot-generate-correct-p2sh-p2wsh-address-from-specified-redemption-script/ https://earlybirdsinvest.com/cannot-generate-correct-p2sh-p2wsh-address-from-specified-redemption-script/#respond Sun, 23 Feb 2025 09:21:58 +0000 https://earlybirdsinvest.com/cannot-generate-correct-p2sh-p2wsh-address-from-specified-redemption-script/

Could you provide the generated code? I’m struggling to generate the P2SH-P2WSH address from the specified redemption script. In reality, there is no key to the witness program. …In this case I just wanted to double check if the generated address and the specified address were the same

Transaction Spec
Private Key 1: 39dc0a9f0b185a2ee56349691f34716e6e0cda06a7f9707742ac113c4e2317bf
Private Key 2: 5077ccd9c558b7d04a81920d38aa11b4a9f9de3b23fab45c3ef28039920fdd6d
Redeem Script (ASM): OP_2 032ff8c5df0bc00fe1ac2319c3b8070d6d1e04cfbf4fedda499ae7b775185ad53b 039bbc8d24f89e5bc44c5b0d1980d6658316a6b2440023117c3c03a4975b04dd56 OP_2 OP_CHECKMULTISIG
Redeem Script (HEX): 5221032ff8c5df0bc00fe1ac2319c3b8070d6d1e04cfbf4fedda499ae7b775185ad53b21039bbc8d24f89e5bc44c5b0d1980d6658316a6b2440023117c3c03a4975b04dd5652ae
Transaction should contain exactly 1 input with:
Outpoint:
Hash: 0000000000000000000000000000000000000000000000000000000000000000
Index: 0
Sequence: 0xffffffff
Transaction should contain exactly 1 output with:
Value: 0.001
Address: 325UUecEQuyrTd28Xs2hvAxdAjHM7XzqVF
Locktime: 0

I’m doing this in Python

# Given Redeem Script (HEX)
redeem_script_hex = "5221032ff8c5df0bc00fe1ac2319c3b8070d6d1e04cfbf4fedda499ae7b775185ad53b21039bbc8d24f89e5bc44c5b0d1980d6658316a6b2440023117c3c03a4975b04dd5652ae"
script_bytes = bytes.fromhex(redeem_script_hex)
sha256_hash = hashlib.sha256(script_bytes).digest()
redeem_script_hash = hashlib.new("ripemd160", sha256_hash).digest()
prefixed_hash = b'\x05' + redeem_script_hash
checksum = hashlib.sha256(hashlib.sha256(prefixed_hash).digest()).digest()(:4)
final_data = prefixed_hash + checksum
address = base58.b58encode(final_data).decode()
print(address)

Putput appears

h-multisig-tx-jatin-2708/python$ python main.py
39C5GaHDocqYVgyCq2TrMfknTL45LPPcKF

But it should come

Address: 325UUecEQuyrTd28Xs2hvAxdAjHM7XzqVF (as given in ques)

Can anyone explain why the addresses are different, as the witness appears to be missing…?