Cboe BZX Exchange has proposed a rule change to the SEC, allowing for in-kind creations and redemptions for shares of the Invesco Galaxy Bitcoin and Ethereum ETFs. This method enables the direct exchange of the ETFs' underlying assets (Bitcoin or Ethereum) for ETF shares without requiring cash transactions. By eliminating the need to sell the underlying cryptocurrencies, it reduces bid/ask spreads and avoids additional broker commissions, enhancing trading efficiency. While authorized participants will utilize this in-kind model, individual investors must continue with cash-based transactions. The SEC is currently reviewing the proposal and has opened a public comment period. This move reflects a broader trend among ETF providers seeking approval for similar mechanisms. Compared to previous periods, cryptocurrency ETFs have faced substantial outflows recently, signaling cautious investor sentiment.

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