Five exchange-traded funds listed on the Chicago Board Options Exchange (CBOE) have submitted updated filings to the U.S. Securities and Exchange Commission, detailing a proposed shift to physical subscription and redemption mechanisms for cryptocurrency ETFs.
The new model would enable authorized participants—including Wall Street institutions and market makers—to directly exchange ETF shares for actual Bitcoin or Ethereum holdings rather than cash equivalents. This in-kind mechanism represents a structural evolution in crypto ETF operations.
The initiative aims to enhance market efficiency and liquidity by minimizing tracking discrepancies between ETF shares and underlying assets. If approved, the framework could reduce transaction costs and price volatility while strengthening the integration of traditional financial systems with cryptocurrency markets.