The US SEC has approved in-kind creation and redemption for Bitcoin and Ether exchange-traded products (ETPs). This move allows authorized participants to swap ETF shares for underlying crypto assets rather than cash.
The legislative move, announced on Tuesday, is anticipated to increase efficiency and lower costs for issuers and investors. SEC Chairman Paul Atkins described it as a step toward establishing a "fit-for-purpose regulatory framework" for cryptocurrency marketplaces.
Previously, the SEC limited spot crypto ETF redemptions to cash only, but increased industry demand and policy momentum have prompted the change. With in-kind redemptions allowed, ETF investors can now receive genuine Bitcoin or Ether when redeeming shares. This allows funds to avoid big asset transactions that may result in greater transaction costs and market impact.
The decision comes after a surge of pro-crypto legislative measures and rising demand for cryptocurrency ETFs. U.S. spot Bitcoin ETFs now contain over 1.29 million BTC (about $152.1 billion), while BlackRock's spot Ether ETF recently surpassed $10 billion in assets, becoming the third-fastest ETF to reach this milestone. The SEC's decision is consistent with broader efforts to promote innovation and efficiency in the US crypto sector.
