US SEC Reviews NYSE Arca Proposal to Permit In-Kind Creations and Redemptions for Bitwise Bitcoin and Ethereum ETFs
On 9 July 2025, the United States Securities and Exchange Commission (US SEC) published the Notice of Filing of Amendment No. 2 to Proposed Rule Change to Amend the Bitwise Bitcoin ETF Trust and the Bitwise Ethereum ETF in Order to Permit In-Kind Creations and Redemptions, submitted by NYSE Arca, Inc. The amendment seeks to allow in-kind creation and redemption of ETF shares in both the Bitwise Bitcoin ETF and Bitwise Ethereum ETF, as an alternative to the existing cash-based model.
- The proposal applies to the Bitwise Bitcoin ETF Trust and the Bitwise Ethereum ETF, both structured as Delaware statutory trusts and listed under NYSE Arca Rule 8.201-E, which governs Commodity-Based Trust Shares.
- The amendment would enable authorised participants to deposit or receive bitcoin and ether directly with the respective Trusts, replacing or supplementing the current cash-only process.
- For the Bitwise Bitcoin ETF Trust, in-kind creation requires bitcoin to be deposited with Coinbase Custody Trust Company, LLC by the 3:59 p.m. ET cutoff time on the order date, with the Trust issuing shares upon receipt.
- If bitcoin is not deposited in time, participants may cancel the order, delay settlement, or opt for the Trust to acquire bitcoin in exchange for US dollars provided by the participant.
- In-kind redemptions from the Bitcoin Trust follow the same timing; bitcoin is delivered to participants who deposit shares in the Trust’s DTC account, and similar contingency options are available if shares are not delivered in time.
- The Bitwise Ethereum ETF follows an identical model, requiring ether deposits with the Ether Custodian for in-kind creation and offering the same alternatives in case of late settlement.
- NYSE Arca asserts that the change aligns with Section 6(b)(5) of the US Securities Exchange Act of 1934, arguing that in-kind processes promote fair and efficient markets, reduce trading impact, and enhance investor protection.
- The exchange also emphasises that in-kind functionality offers authorised participants greater flexibility and efficiency, particularly during high market volatility.
- All previous amendments are superseded by Amendment No. 2, making this the operative filing for the proposed operational change.
- The US SEC has invited public comments on File No. SR-NYSEARCA-2025-38, which can be submitted via the SEC website or by email, with the 21-day comment window open following publication in the Federal Register.
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U.S. SEC Brings Fraud Charges Against Georgia-Based First Liberty Building & Loan for $140 Million Ponzi Scheme
On 10 July 2025, the United States Securities and Exchange Commission (US SEC), through Release No. 2025-98, announced a civil enforcement action against First Liberty Building & Loan, LLC, a Georgia-based lender, and its founder Edwin Brant Frost IV. The complaint, filed in the U.S. District Court for the Northern District of Georgia, alleges a decade-long $140 million Ponzi scheme that defrauded nearly 300 investors, and seeks emergency and permanent relief under federal securities laws.
- First Liberty and Frost allegedly raised $140 million from investors between 2014 and June 2025 by offering promissory notes and loan participation agreements.
- Investors were promised annual returns ranging from 8% to 18%, with assurances that funds would support short-term loans to small businesses.
- According to the US SEC, funds were instead diverted to repay earlier investors, forming a classic Ponzi structure.
- By 2021, First Liberty was financially unsustainable and relied heavily on new investor money to cover obligations.
- Edwin Brant Frost IV allegedly misused investor funds for personal luxury expenses, including $2.4 million in credit card payments and $230,000 in family vacations.
- Purchases also included a Patek Philippe watch, high-value jewellery, and $335,000 paid to a rare coin dealer.
- Five entities i.e. First Liberty Capital Partners LLC, First National Investments LLC, MyHealthAI Capital LLC, The Legacy Advisory Group Inc., and The Liberty Group LLC – were named as Relief Defendants.
- These entities allegedly received fraud proceeds without providing fair value in return.
- The defendants were charged with violating the antifraud provisions of the US Securities Act of 1933 and the Securities Exchange Act of 1934.
- Both the primary and relief defendants consented to emergency and permanent relief measures, with financial penalties to be determined later.
- The action was filed under Sections 17(a) and 10(b) of federal securities laws, reinforcing the US SEC’s investor protection mandate.
- US SEC Associate Director Justin C. Jeffries warned investors against high-return promises, calling such offers red flags for fraud.
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George R. Botic Appointed Acting Chair of the PCAOB Following Erica Williams’ Resignation
On 21 July 2025, the United States Securities and Exchange Commission (US SEC) announced, via Release No. 2025-100, the appointment of George R. Botic as Acting Chair of the Public Company Accounting Oversight Board (PCAOB), effective from 23 July 2025. The appointment follows the resignation of Chair Erica Y. Williams, which takes effect on 22 July 2025. The move ensures a smooth leadership transition within the PCAOB, the key audit oversight body established under the United States Sarbanes-Oxley Act of 2002.
- The US SEC exercised its authority under the Sarbanes-Oxley Act to designate George R. Botic as Acting Chair of the PCAOB.
- Erica Y. Williams will officially step down as Chair of the PCAOB on 22 July 2025.
- George R. Botic’s appointment as Acting Chair takes effect from 23 July 2025.
- Chairman Paul S. Atkins thanked Erica Williams for her service and expressed confidence in Mr Botic’s leadership.
- George R. Botic stated that he is honoured to serve and committed to fulfilling the PCAOB’s congressional mission.
- Mr Botic was appointed to the PCAOB Board on 25 October 2023.
- He is a Certified Public Accountant with over a decade of public accounting and regulatory experience.
- Prior to this role, he served as Director of the PCAOB’s Division of Registration and Inspections, overseeing audits of domestic and international firms.
- He has also held roles as Director of the Office of International Affairs, Special Advisor to former Chair James R. Doty, and Deputy Director of the Registration and Inspections Division.
- Before joining the PCAOB, he worked as a Senior Manager at PricewaterhouseCoopers.
- Mr Botic holds a Master of Accountancy from Virginia Tech and is an alumnus of Shepherd University.
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US SEC Chairman Paul S. Atkins Delivers “Statement on President Trump Signing the GENIUS Act into Law,” Advancing America’s Crypto Innovation Leadership
On 18 July 2025, the United States Securities and Exchange Commission (US SEC) Chairman Paul S. Atkins issued a statement titled “Statement on President Trump Signing the GENIUS Act into Law“, welcoming the passage of the GENIUS Act as a landmark moment in US financial and crypto regulatory history. The statement underscored the Act’s potential to transform America’s financial infrastructure through blockchain and stablecoin integration, while promoting regulatory clarity and innovation leadership.
- Chairman Atkins called the GENIUS Act a monumental step for crypto assets, financial markets, and national economic strategy.
- He reaffirmed that blockchain and crypto asset technologies can revolutionise US financial infrastructure by enabling transparency, cost-efficiency, and reduced systemic risks.
- He emphasised the need for clear regulatory pathways to allow market participants to adopt emerging technologies with confidence.
- The statement praised President Trump and his administration for championing America’s readiness to lead in crypto asset innovation.
- The GENIUS Act was described as providing critical guidance on payment stablecoins, a core part of the crypto ecosystem.
- Atkins highlighted that regulated payment stablecoins will increase transaction efficiency and lower costs for both companies and individuals.
- He projected that stablecoins would become integral to the securities industry, particularly in settlement and margining functions.
- He directed SEC staff to consider whether guidance, rulemaking, or accommodations are necessary to support SEC-registered entities using stablecoins.
- Market participants were invited to actively engage with US SEC staff to help shape future regulatory frameworks under the Genius Act.
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US SEC Commissioner Hester M. Peirce Releases “Smart Start: Statement on the GENIUS Act,” Highlighting Clarity and Protections for Payment Stablecoins
On 18 July 2025, United States Securities and Exchange Commission (US SEC) Commissioner Hester M. Peirceissued a public statement titled “Smart Start: Statement on the GENIUS Act“, describing the signing of the US GENIUS Act into law as a landmark development that provides regulatory clarity for payment stablecoins, affirms they are not securities, and encourages the US SEC to issue guidance for registrants’ use of stablecoins.
- Commissioner Peirce welcomed the GENIUS Act as a critical milestone in clarifying crypto regulation, enabling innovation to flourish under a clear legal regime.
- She confirmed that the Act establishes that payment stablecoins are not securities, removing SEC jurisdiction over their issuance and usage as payments instruments.
- Peirce highlighted that privately issued stablecoins are already in wide use as a payment mechanism, reflecting public demand and practical utility.
- The GENIUS Act assigns primary oversight responsibilities to state and federal banking regulators, thereby ensuring robust prudential supervision.
- She called on the US SEC to issue guidance for registrants interacting with stablecoins, particularly around customer use and compliance integration.
- Peirce invited SEC-regulated entities to engage with the Crypto Task Force to help shape how the SEC should support innovation in line with the new law.
- The statement underlined bipartisan support for stablecoin legislation and noted the GENIUS Act as the first comprehensive federal digital asset law in the US.
- Commissioner Peirce positioned the SEC’s future role as one of facilitation, not obstruction, in adapting securities regulation to work alongside stablecoin innovation.
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US SEC Chairman Paul S. Atkins Issues “Statement on Passage of the GENIUS Act by the House of Representatives,” Regulatory Milestone for Crypto
On 17 July 2025, the United States Securities and Exchange Commission (US SEC) Chairman Paul S. Atkins issued a public statement titled “Statement on Passage of the GENIUS Act by the House of Representatives” congratulating the US House of Representatives on the passage of the US GENIUS Act, marking a pivotal moment in the creation of a clear and innovation-friendly regulatory framework for payment stablecoins.
- Chairman Atkins applauded both the US House and Senate for their coordinated efforts in passing the GENIUS Act and described it as a historic milestone for crypto entrepreneurs and financial market participants.
- The US GENIUS Act is designed to create a comprehensive regulatory framework for payment stablecoins, encouraging cost efficiency, transparency, and financial risk mitigation.
- The legislation is sponsored by Senate Banking Committee Chairman Tim Scott, House Financial Services Committee Chairman French Hill, Senator Cynthia Lummis, and Senator Bill Hagerty.
- Atkins praised the Act for providing clear legal rules for innovators working with blockchain and crypto asset technologies, which he described as tools that could revolutionise the US financial infrastructure.
- He emphasised the need for innovators to have regulatory clarity to safely bring new technologies to market, while protecting consumers and ensuring market integrity.
- Atkins expressed optimism for the future, stating that payment stablecoin solutions developed under the GENIUS Act’s framework will help make transactions faster, cheaper, safer, and backed by strong risk controls.
- The statement underlined the US SEC’s support for regulatory innovation, echoing the need for modern rules that match technological advancement in digital finance.
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