30.07.2025 03:58

The Securities and Exchange Commission (SEC) has authorized in-kind redemptions for Bitcoin and Ether exchange-traded funds (ETFs), marking a significant policy shift. This crucial adjustment allows institutional investors to create and redeem ETF shares using the underlying crypto assets (BTC and ETH) directly, eliminating the need for cumbersome fiat currency conversions. The streamlining of this process promises to significantly enhance market efficiency.

This decision brings US regulatory policy into alignment with international practices, notably Hong Kong's approach. Unlike the initial US cash-only system, which SEC Commissioner Mark Uyeda previously condemned as a concerning precedent, Hong Kong's crypto ETFs have utilized in-kind redemptions since their inception. This difference stems partly from Hong Kong’s regulatory framework, which necessitates collaboration between ETF issuers and licensed local crypto exchanges, ensuring secure custody solutions. Such stipulations weren't initially present in other jurisdictions like Ontario, Canada, the first to introduce crypto ETFs.

The disparity also highlights the protracted and contentious debate surrounding Ether's regulatory status in the US, a discussion absent in Hong Kong. Hong Kong's Securities and Futures Commission (SFC) explicitly stated its allowance of in-kind redemptions in late 2023, a key factor contributing to the April 2024 launch of its crypto ETFs. The SEC's move, therefore, not only improves market functionality but also reflects a growing global consensus on efficient crypto ETF structures. The availability of in-kind redemptions is now a feature mirroring international best practices.