Key Takeaways
- SEC approves in-kind creation and redemption for Bitcoin and Ether ETPs, enabling direct asset exchange.
- The new rules are expected to make bitcoin ETFs less costly and more efficient for issuers and investors.
- US spot Bitcoin ETFs now hold over 1.29 million BTC, reflecting strong institutional demand.
The US Securities and Exchange Commission (SEC) has approved in-kind creation and redemption for Bitcoin and Ether exchange-traded products (ETPs), allowing authorized participants to exchange shares directly for the underlying assets rather than cash.
SEC efficiency
SEC Chairman Paul Atkins emphasized the significance of the new rules, stating:
“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.”
Jamie Selway, director of the Division of Trading and Markets at the SEC, added that these measures would bring more flexibility and cost savings to ETP issuers, authorized participants, and investors, ultimately resulting in a more efficient market.
What in-kind redemptions mean
In-kind redemptions allow investors to receive the underlying assets, such as Bitcoin, rather than cash when redeeming ETF shares.
This mechanism can help authorized participants avoid selling assets on the open market, potentially reducing transaction costs and market impact.
Policy momentum
The move to allow in-kind transactions comes amid a broader industry shift toward more pro-bitcoin policy.
SEC Commissioner Hester Peirce recently noted at the Bitcoin Policy Institute conference that support for in-kind redemptions has been growing.
This policy development coincides with recent Congressional action on several bitcoin-related bills and continued growth in ETF demand, with US spot Bitcoin ETFs recently reporting a streak of consecutive inflows.
