Bitwise Updates Dogecoin and Aptos ETFs to Include In-Kind Redemptions

Bitwise has updated its proposed Dogecoin and Aptos ETFs to incorporate in-kind redemptions, according to filings submitted on Thursday. This adjustment reflects ongoing discussions with U.S. regulators regarding the future framework for altcoin funds and investor access to the underlying digital assets.

In-kind redemptions allow investors to exchange ETF shares directly for the corresponding cryptocurrency, rather than cash. This mechanism offers potential tax benefits and aligns the ETF structure more closely with the preferences of many crypto-native investors.

The approach is viewed favorably by both retail and institutional investors, who see it as a means to reduce costs and enhance liquidity within the ETF.

In-Kind Creations and Redemptions

Earlier this year, the U.S. Securities and Exchange Commission (SEC) solicited feedback on proposals to integrate in-kind creations and redemptions for spot Bitcoin and Ether ETFs. During a recent panel hosted by the Bitcoin Policy Institute, SEC Commissioner Hester Peirce indicated that approvals for in-kind redemptions within crypto ETFs may be forthcoming, adding impetus to ETF issuers’ plans.

Bitwise initially filed for its Dogecoin ETF in January and its Aptos ETF in March. Amendments to ETF proposals are a standard part of the regulatory review process, allowing issuers to refine fund structures based on SEC input.

Solomon Tesfaye, head of capital markets at Aptos Labs, highlighted the importance of ETF access for Aptos and similar Layer 1 networks. “ETF access would mark a major step forward in integrating Aptos and other L1s into traditional capital markets,” Tesfaye stated, describing it as a potential "game-changer" for liquidity, capital inflows, and institutional validation.

Dogecoin, known for its memecoin origins and a market capitalization of $24.1 billion, continues to attract ETF interest. Grayscale and 21Shares have also filed to launch DOGE ETFs. Aptos, developed by former Meta engineers, is the 32nd-largest cryptocurrency with a market capitalization of $2.85 billion and a 52-week high of $20.

Altcoin ETFs Gain Momentum

The increase in altcoin ETF filings coincides with the SEC’s evolving perspective, potentially influenced by the administration, which has fostered new applications. A significant number of crypto ETFs are under SEC review, with numerous altcoin ETF applications submitted this year.

While some critics express concerns that crypto ETFs could centralize assets within a sector predicated on decentralization, the overall trend indicates robust market demand for integrating altcoins more deeply into mainstream financial markets.