SEC Commissioner Hester Peirce stated that the physical redemption of Bitcoin ETF is imminent.

According to Gate News bot and a report by Coindoo, SEC Commissioner Hester Peirce stated that physical redemption of cryptocurrency exchange-traded funds (ETFs), a structure favored by companies like BlackRock, could soon become a reality. Peirce addressed questions regarding the potential shift in the creation and redemption mechanism of spot Bitcoin ETFs from cash to physical during a panel discussion hosted by the Bitcoin Policy Institute.

"These applications are currently under review," Pierce said. "I definitely think this will come up at some point. I can't predict in advance, but we've heard that a lot of people are interested in this."

Physical redemption allows ETF shares to be directly exchanged for the underlying asset (in this case, Bitcoin) without cash settlement. Many institutional investors, including BlackRock and Fidelity, believe that the physical redemption process can reduce friction, lower tax implications, and enhance the efficiency of the ETF, especially for Crypto Assets products with high trading volumes.

In January of this year, Nasdaq on behalf of BlackRock submitted a 19b-4 form requesting approval for its conversion to a physical structure. Since then, several other companies have followed suit.

Although the SEC initially approved a pure cash model when it approved the Spot Bitcoin ETF at the beginning of 2024, the industry continues to push for a more traditional physical model, which is commonly used for stock ETFs.

Pierce's comments indicate that the agency is actively reviewing these proposals, although a formal timeline for a decision has not yet been announced.

If approved, this transition could signify a major transformation in the way crypto ETFs operate, potentially increasing efficiency and attracting institutional investor adoption.