IRS and Treasury tighten tax scrutiny of crypto ETFs over $7.22B in in-kind redemptions
- —IRS and Treasury are scrutinizing in-kind redemptions by crypto ETFs for potential tax avoidance
- —BlackRock's IBIT and ETHA distributed $7.22 billion in BTC and ETH via in-kind redemptions in six months
- —Revenue Ruling 2026-20 rejected prearranged Section 351 transactions
- —Treasury may issue retroactive rules, while the IRS says it can already challenge abusive strategies under current law
Why it matters: Tighter tax enforcement could raise costs for crypto ETFs and reduce the appeal of in-kind redemptions for institutional investors.
Source: The Cryptonomist (IT)