The U.S. Securities and Exchange Commission is evaluating amendments that would permit in-kind creations and redemptions for Bitcoin and Ethereum exchange-traded products (ETPs). This proposed shift from cash-only transactions aims to reduce costs and minimize tracking errors by enabling direct exchanges of cryptocurrency assets between authorized participants and issuers.
Industry experts view the SEC’s contemplation of in-kind mechanisms as a significant step toward aligning digital asset ETPs with traditional ETF market practices. James Seyffart of Bloomberg Intelligence highlights that this adjustment could substantially improve operational efficiency and attract greater institutional participation in cryptocurrency investment vehicles.
The initiative involves prominent financial firms including Fidelity and VanEck, signaling potential structural adaptations to existing ETP frameworks that better accommodate digital assets. Market analysts predict this review could lead to enhanced market liquidity, more accurate product tracking, and broader adoption of cryptocurrency ETFs among investors seeking regulated exposure to digital assets.