Cboe applies to SEC to allow physical redemption of Invesco Galaxy Bitcoin and Ethereum ETFs

According to Decrypt, Cboe BZX exchange has submitted a proposed rule change on behalf of Invesco Galaxy to the US Securities and Exchange Commission (SEC), aimed at allowing its spot Bitcoin ETF and Ethereum ETF to physically create and redeem shares. Physical redemption and creation allow for direct exchange of ETF underlying assets (Bitcoin or Ethereum) with ETF shares, thereby bypassing cash requirements. This method eliminates the need for participants to sell underlying cryptocurrencies to create shares, reduces bid ask spreads, and avoids additional brokerage commissions. With the SEC's review of Cboe's proposed rule changes, a public comment period has been opened, allowing stakeholders to share their ideas before the final decision is made. The document states that authorized participants - institutions involved in the creation and redemption process - will be eligible to use the physical trading model. Individual investors will still need to use a cash based model when purchasing or redeeming ETF shares.