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BlackRock and Ark Invest have proposed an alternative to cash redemptions for their potential spot Bitcoin ETFs, known as in-kind redemptions. This process involves transferring Bitcoin from the ETF to the investor in exchange for their shares, which would be carried out by authorized market participants. BlackRock and Ark believe this structure is more tax-efficient for investors as it avoids the need for the fund to sell securities to meet redemptions, which could trigger capital gains taxes. This proposal is part of discussions between these asset managers and the US Securities and Exchange Commission, where redemptions have emerged as a sticking point in the approval process for spot Bitcoin ETFs.
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