SEC Streamlines Bitcoin & Ethereum ETFs with In-Kind Redemptions

SEC Approves In-Kind Redemptions for Bitcoin and Ethereum ETFs

The Securities and Exchange Commission (SEC) has approved in-kind creation and redemption mechanisms for spot Bitcoin and Ethereum exchange-traded products (ETPs), bringing them in line with traditional commodity ETFs. This replaces the previous cash-only model.

This change allows authorized participants to directly deliver or receive Bitcoin and Ether when issuing or redeeming shares. The anticipated result is reduced costs and enhanced tax efficiency for both issuers and investors.

"It’s a new day at the SEC," stated Chairman Paul S. Atkins. "A key priority of my chairmanship is developing a fit-for-purpose regulatory framework for crypto asset markets. Investors will benefit from these approvals, as they will make these products less costly and more efficient.”

Bloomberg ETF analyst Eric Balchunas welcomed the decision, noting in a post on X that the SEC’s “order granting accelerated approval” signals a broader wave of ETF approvals and anticipates more approvals by early fall.

Fellow Bloomberg analyst James Seyffart said this approval sets a precedent for future altcoin ETFs, which will likely allow in-kind creation and redemption from the start.

Alongside in-kind approval, the SEC has also advanced other crypto ETF developments, including approvals for mixed BTC-ETH ETPs, listed and FLEX options on Bitcoin ETFs, and raised position limits on BTC ETF options to 250,000 contracts.

Two new scheduling orders were also issued for upcoming large-cap crypto ETF proposals, marking a move toward a more neutral and structured regulatory environment.