SEC Opens Door to In-Kind Redemption Option for Crypto ETFs
Main Idea
The SEC has approved in-kind redemptions for crypto ETPs, allowing issuers to receive underlying cryptocurrencies directly instead of cash, which is expected to increase market efficiency and flexibility.
Key Points
1. The SEC voted on July 29, 2025, to approve in-kind redemptions for crypto ETPs, enabling direct receipt of cryptocurrencies rather than cash.
2. This change is anticipated to reduce costs and improve efficiency for crypto ETFs, benefiting issuers and market makers.
3. In-kind transfers provide institutional investors with better tax efficiency by deferring capital gains until the crypto is sold.
4. The SEC also approved mixed spot Bitcoin and Ether ETPs, along with options and FLEX options on certain Bitcoin products.
5. The move may lead to tighter spreads, better liquidity, and attract more institutional investors to the crypto ETF market.
Description
The US Securities and Exchange Commission ( SEC ) has cleared the way for crypto ETFs to use in-kind creations and redemptions, a move industry participants say could make the fast-growing market more efficient and cost-effective. The regulator voted on July 29 to approve orders allowing authorized participants to create and redeem shares of Bitcoin and Ether exchange-traded products (ETPs) in kind, meaning they can receive the underlying cryptocurrency directly rather than cash. Until now, spot...
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