The U.S. Securities and Exchange Commission (SEC) has authorized in-kind creation and redemption mechanisms for spot Bitcoin and Ether exchange-traded funds (ETFs). This regulatory approval allows ETF shares to be exchanged directly for the underlying cryptocurrency assets, eliminating the need for market sales during transactions and significantly improving efficiency while reducing costs.
SEC Chairman Paul Atkins affirmed that this approach makes crypto exchange-traded products ‘less costly and more efficient.’ Market structure expert Jamie Selway emphasized the flexibility and cost savings enabled by the in-kind model. The policy shift aligns with broader U.S. pro-crypto regulatory developments, evidenced by $6.6 billion in net inflows to U.S. spot Bitcoin ETFs over 12 consecutive days and BlackRock’s iShares Ethereum ETF surpassing $10 billion in assets within 251 days.
The approval aims to establish a more transparent and trustworthy environment for crypto ETFs, facilitating improved market operations and increased institutional accessibility by minimizing friction in creation and redemption processes.