30.07.2025 08:15

The U.S. Securities and Exchange Commission (SEC) has significantly altered the landscape of cryptocurrency exchange-traded products (ETPs) by authorizing in-kind creation and redemption mechanisms. This landmark decision eliminates the previous cash-only requirement for crypto ETFs, marking a pivotal moment for Bitcoin and Ether funds, and the broader crypto market.

This crucial change aligns crypto ETPs with established commodity-based ETFs, thereby streamlining operations and substantially reducing costs. No longer will authorized participants (APs) be obligated to convert crypto assets into cash when creating or redeeming ETF shares—a process previously known for its inefficiency and expense. The result promises to be a more fluid and cost-effective market for crypto investment vehicles.

By allowing direct deposit and withdrawal of cryptocurrencies like Bitcoin and Ether, the SEC's new framework fosters a more efficient market structure. This enhanced efficiency is expected to attract increased institutional investment, driving greater liquidity and potentially accelerating the growth of the crypto ETF market. Statements from SEC Chairman Paul S. Atkins heralded the decision as a step toward greater cost-effectiveness and efficiency in the crypto ETP space.

The SEC's press release underscores its commitment to a more rational and long-term regulatory approach to cryptocurrencies, treating them more similarly to traditional asset classes. This "merit-neutral" approach ensures that crypto ETPs are assessed using the same rigorous standards applied to other commodity-based ETFs, promoting fair and transparent market practices. The impact of this regulatory shift is likely to be far-reaching, ushering in a new era of growth and sophistication for the cryptocurrency ETF market.