The U.S. Securities and Exchange Commission (SEC) has announced the initiation of proceedings to determine whether to approve or disapprove a proposed rule change by Cboe BZX Exchange, Inc. (BZX) concerning the WisdomTree Bitcoin Fund.
The proposal aims to amend current rules to permit the in-kind creation and redemption of shares for the fund, representing a significant shift from the existing cash-only process.
On February 20, 2025, BZX filed a proposed rule change with the SEC under Section 19(b)(1) of the Securities Exchange Act of 1934.
The change would allow the WisdomTree Bitcoin Fund to process creations and redemptions of its shares either in cash or in-kind, meaning with actual bitcoin, rather than exclusively in cash as previously required.
The proposed amendment was published for public comment in the Federal Register on March 5, 2025. On April 14, 2025, the SEC extended the review period, setting June 3, 2025, as the deadline for approving, disapproving, or instituting proceedings on the proposal.
The core of the proposed rule change is to permit in-kind transactions for the creation and redemption of shares in the WisdomTree Bitcoin Fund. Under the amendment, authorised participants would be able to deliver or receive bitcoin directly, rather than converting to or from cash.
All other requirements and representations for the fund’s listing and trading would remain unchanged.
The SEC has instituted proceedings under Section 19(b)(2)(B) of the Exchange Act to analyze further whether the proposed rule change is consistent with Section 6(b)(5), which mandates that exchange rules must prevent fraudulent and manipulative acts, promote fair trading principles, and protect investors and the public interest.
According to the commission, the initiation of proceedings does not indicate any final decision on the merits of the proposal.
The SEC is seeking public comment on the proposed rule change, specifically regarding its consistency with the Exchange Act and its potential impact on market integrity and investor protection.
Interested parties are invited to submit written comments within 21 days of publication in the Federal Register, with rebuttals due within 35 days.
