The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption processes for Bitcoin and Ethereum exchange-traded funds (ETFs), while simultaneously establishing a fast-track system for altcoin ETF approvals. These regulatory updates position in-kind transactions as a standardized framework for crypto ETFs.
Under the new structure, authorized participants can directly exchange actual Bitcoin or Ethereum tokens with ETF issuers during share creation and redemption. This approach significantly reduces transaction costs and operational complexities compared to cash-based settlements.
The SEC also implemented an accelerated approval pathway for altcoin ETFs, designed to minimize regulatory delays and foster innovation across the broader cryptocurrency sector. This streamlined process could catalyze new investment vehicles beyond the established Bitcoin and Ethereum products.
Concurrently, position limits for options on the iShares Bitcoin Trust (IBIT) increased tenfold to enhance liquidity and trading activity in the Bitcoin options market. This expansion allows for greater trading volumes and improved market depth within crypto-linked derivatives.
SEC Chairman Paul Atkins emphasized that in-kind approvals establish a rational regulatory foundation for cryptocurrency exchange-traded products. Industry analysts predict these coordinated measures will drive higher trading volumes and cultivate a more dynamic, institution-friendly ETF ecosystem.