Bitcoin News Today: SEC Approves In-Kind Creation for Bitcoin and Ether ETFs Boosting Efficiency and Liquidity

The U.S. Securities and Exchange Commission (SEC) has authorized in-kind creation and redemption for spot Bitcoin and Ether ETFs, marking a pivotal development in crypto asset regulation. This change allows ETF shares to be created and redeemed using the underlying cryptocurrencies directly, replacing the previous cash-only structure. The move aligns crypto ETFs with traditional commodity-based exchange-traded products, enhancing operational efficiency and reducing transaction costs for investors and market makers. The approval is expected to improve liquidity and streamline fund management by minimizing slippage and unnecessary transaction layers [1].

SEC Chairman Paul S. Atkins highlighted the significance of the decision, stating that the Commission is committed to developing a regulatory framework suitable for crypto asset markets. He emphasized that the new rules make these products less costly and more efficient, benefiting both investors and issuers. Jamie Selway, Director of the Division of Trading and Markets, added that the Commission’s decision is an important step forward for the growing crypto-based ETP market. The in-kind process provides flexibility and cost savings to ETP issuers, authorized participants, and investors, fostering a more efficient market structure [1].

In addition to in-kind creation and redemption for Bitcoin and Ether ETFs, the SEC also approved several other crypto-related products. These include exchange-traded products that hold a mix of spot Bitcoin and Ether, options and FLEX options linked to Bitcoin ETFs, and increased position limits up to 250,000 contracts for Bitcoin ETF options. These measures further integrate crypto assets into established financial frameworks, enhancing market depth and flexibility. The Commission also opened public comment periods for proposals to list large-cap crypto-based ETPs, demonstrating its ongoing commitment to aligning crypto markets with existing regulatory and operational standards [1].

The shift from a cash-only model to in-kind transactions is expected to attract more participants to the crypto ETF space, making its structure closer to that of traditional financial instruments. By enabling direct transfers of cryptocurrencies instead of cash conversions, the process reduces costs and improves flexibility for issuers, market makers, and investors. This simplification minimizes operational complexity and is likely to encourage broader participation in regulated crypto investment products, fostering innovation within the digital asset ecosystem [1].

The approval of in-kind creation and redemption for spot Bitcoin ETFs is a significant step toward mature crypto asset regulation. By aligning crypto ETFs with traditional commodity ETP standards, the market gains efficiency, flexibility, and investor benefits. These developments signal a promising future for regulated crypto investment products and underscore the SEC’s role in shaping the evolving landscape of digital assets [1].

Source: [1] SEC May Enhance Market Efficiency by Allowing In-Kind Creation for Spot Bitcoin ETFs July 30, 2025 (https://en.coinotag.com/sec-may-enhance-market-efficiency-by-allowing-in-kind-creation-for-spot-bitcoin-etfs/)