On 2 June 2025, the United States Securities and Exchange Commission (US SEC) published an Order instituting proceedings to determine whether to approve or disapprove a proposed rule change submitted by Cboe BZX Exchange, Inc. The proposal seeks to amend the listing terms of the VanEck Bitcoin Trust and the VanEck Ethereum Trust to allow in-kind creations and redemptions under BZX Rule 14.11(e)(4), which governs commodity-based trust shares.
The proposed rule change was filed by the exchange on 19 February 2025 under Section 19(b)(1) of the United States Securities Exchange Act of 1934 and United States SEC Rule 19b-4. It was published in the Federal Register on 5 March 2025. The US SEC initially extended the decision timeline to 3 June 2025, and has now opened formal proceedings under Section 19(b)(2)(B) of the same Act to allow for further analysis.
According to the proposal, the exchange intends to amend the operational mechanics of the VanEck Bitcoin Trust and VanEck Ethereum Trust to allow market participants to create and redeem shares in-kind, meaning with bitcoin or ether rather than cash. All other representations approved by the US SEC when these trusts were originally listed would remain unchanged and continue to serve as ongoing listing conditions.
The US SEC clarified that instituting proceedings does not indicate any conclusion on the merits of the proposal. The review is being initiated to determine whether the proposed rule change is consistent with Section 6(b)(5) of the United States Securities Exchange Act of 1934. This provision requires that exchange rules be designed to prevent fraudulent and manipulative practices, ensure fair trading, support the mechanism of a free and open market, and protect investors and the public interest.
The US SEC also invites public comments on whether the proposed rule change complies with applicable law and regulations. Submissions may be made electronically or by post and must reference file number SR-CboeBZX-2025-031 till 21 days after published in the Federal Register. Rebuttal comments may also be submitted till 35 days after published in the Federal Register. The US SEC will review all relevant materials before issuing its final determination.
(Source: https://www.sec.gov/files/rules/sro/cboebzx/2025/34-103164.pdf)
