BlackRock, the world’s largest asset manager, has submitted a regulatory filing seeking permission to allow in-kind redemptions within its Ethereum Trust.
If approved, this would let the fund directly repurchase Ethereum (ETH) rather than relying solely on cash-based mechanisms, giving it more flexibility in managing crypto assets.
A Shift Toward More Active ETH Management
The in-kind redemption model is widely used in traditional exchange-traded funds (ETFs), especially in spot Bitcoin ETFs, where it has proven to be more tax-efficient and cost-effective. By applying this method to its Ethereum Trust, BlackRock aims to strengthen its operational efficiency and better align with institutional standards.
This approach would allow investors to exchange shares of the trust for Ethereum directly, rather than redeeming them for cash. In practice, this means that BlackRock can engage in direct ETH buybacks when investors choose to exit their positions in the fund, maintaining better liquidity and potentially improving price tracking.