BlackRock is moving closer to launching a spot Ethereum ETF by amending its S-1 filing to allow in-kind creation and redemption. The move could simplify ETF share transactions and increase efficiency while showing renewed institutional support for Ethereum.
BlackRock Seeks In-Kind Creation and Redemption for Ethereum ETF
BlackRock filed a post-effective amendment to its S-1 form for the iShares Ethereum Trust (ETHA) with the U.S. Securities and Exchange Commission (SEC). The amendment followed a meeting between BlackRock and the SEC’s Crypto Task Force.
NEW: Amended S-1 just dropped for BlackRock's Ethereum ETF — $ETHA. Looks like the main change is added language around allowing for in-kind creation/redemption when approved by the SEC.
(@EricBalchunas & I expect SEC approval for in-kind at some point this year) pic.twitter.com/HWkTfrDNsJ
— James Seyffart (@JSeyff) May 9, 2025
The new filing outlines plans to permit in-kind creation and redemption alongside the existing cash method. According to the document, “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.”
In-kind creation allows authorized participants to deliver Ethereum instead of cash to receive ETF shares. Similarly, redemptions can involve receiving Ethereum rather than fiat. This structure is often seen in traditional ETFs and can reduce transaction costs and improve pricing accuracy.
In-Kind Mechanism Reduces Costs and Tax Burden
BlackRock’s proposal aims to improve efficiency for institutional investors by avoiding the conversion of ETH into cash. This helps reduce slippage and capital gains tax during transactions, which can otherwise result from asset sales.
In a typical cash model, ETF issuers must sell ETH to obtain dollars for redemptions. This may trigger taxable events and increase trading fees. With an in-kind system, those selling ETF shares can receive ETH directly, preserving value and streamlining operations.
This structure could also enhance ETH price tracking within the ETF. Direct transactions involving Ethereum reduce the need for external execution costs and better align the fund’s holdings with its net asset value.
BlackRock Buys 7,976 ETH After Filing Change
Shortly after the updated filing, BlackRock purchased 7,976 ETH valued at approximately $18.9 million. This acquisition increased the total holdings of the iShares Ethereum Trust to over 1 million ETH, worth around $2.9 billion. Only Grayscale’s Ethereum Trust holds more.
The purchase signals strong confidence in Ethereum and follows broader institutional movements. Abraxas Capital, a London-based investment firm, moved 138,511 ETH worth $333 million off exchanges. These actions suggest increasing demand from large investors.
Ethereum’s price stood at $2,464 at press time, rising 6.52% over the past 24 hours. The asset gained 34.97% over the week and is up nearly 70% in one month, according to CoinMarketCap data.
Ethereum ETF Market Developments Continue
BlackRock’s filing also incorporates content from its Annual Report into the registration statement. With these changes adhered to, the process of disclosure becomes clearer and conforms more to the SEC’s expectations.
The amendment is among the current discussions being held between the SEC and ETF issuers on staking, tokenization and products linked to cryptocurrencies. If regulatory approval were to be granted then BlackRock’s approach could motivate other providers to explore in-kind model for their Ethereum ETFs.
BlackRock is not the only notable applicant for the approval of the Ethereum ETF; also applying are Fidelity, ARK Invest, and Franklin Templeton. Tough timelines notwithstanding, it is expected that financial regulators will soon approve actions on the applications.
#blockchain #crypto, #decentralized, #distributed, #ledger
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