The U.S. Securities and Exchange Commission (SEC) has granted approval for in-kind redemptions for spot Bitcoin Exchange-Traded Funds (ETFs) and Ethereum ETFs.
This regulatory decision allows investors to redeem their ETF shares by directly receiving the underlying Bitcoin or Ethereum tokens from the fund’s holdings.
In-kind redemptions enhance investor flexibility by providing an alternative method beyond traditional cash settlements.
The move is expected to reduce operational costs associated with ETF transactions by minimizing the need for intermediary cash maneuvers.
Market participants anticipate the change will significantly improve liquidity within these markets by enabling direct token exchanges.
Prior to this approval, creations and redemptions for spot Bitcoin and Ethereum ETFs were limited solely to cash transactions.
The SEC’s action signals growing regulatory confidence in the operational framework and security of crypto-related Exchange-Traded Products.
Analysts view this development as a critical step forward for the digital asset market, enhancing market efficiency and fostering potential innovation across the ETF sector.