The SEC approved in-kind creation and redemption mechanisms for crypto ETFs including Bitcoin and Ethereum, reshaping market strategies and investor interactions on July 30, 2025.
By aligning crypto ETFs with traditional commodity-based counterparts, this shift enhances market efficiency and cuts costs, directly benefiting institutional investors and potentially increasing liquidity.
The US Securities and Exchange Commission has approved the use of in-kind creation and redemption mechanisms for Bitcoin and Ethereum ETPs. The move aims to align crypto ETPs with traditional commodity-based ETFs.
The SEC’s decision marks a shift from a cash-only model, significantly impacting market efficiency. Paul S. Atkins, SEC Chairman, emphasized the move’s potential to make such financial products less costly and more efficient.
Institutional Investor Benefits From New SEC Rule
The new rule directly affects institutional investors, improving liquidity and lowering costs. Institutional flows are expected to increase, enhancing the participation of major issuers like BlackRock in the market.
Historical trends indicate that in-kind mechanisms in traditional commodity ETFs have boosted market efficiency. This policy change is likely to further apply these benefits within the crypto-assets market.
In-Kind Policies Echo Commodity ETF Success
The shift to in-kind methods in crypto ETPs matches past transformations in commodity ETFs, closing previous efficiency gaps. Economic outcomes from such changes have been positive.
Experts note that reducing friction through in-kind mechanisms could significantly increase institutional involvement. Given previous experiences, this shift is likely to enhance the market structure of crypto ETFs.
“It’s a new day at the SEC, and a key priority of my chairmanship is developing a fit-for-purpose regulatory framework for crypto asset markets. I am pleased the Commission approved these orders permitting in-kind creations and redemptions for a host of crypto asset ETPs. Investors will benefit from these approvals, as they will make these products less costly and more efficient.” — Paul S. Atkins, Chairman, SEC
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