Bitcoin News Today: SEC Approves In-Kind Bitcoin and Ethereum ETFs Cuts Costs 20%

The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption mechanisms for spot Bitcoin and Ethereum ETFs, a development expected to significantly reduce transaction costs and enhance market efficiency. This regulatory change, which allows authorized participants to exchange actual crypto assets instead of cash, brings crypto ETFs closer to traditional commodity ETFs and is projected to cut transaction costs by up to 20% [1]. The move has been described as a major milestone in the integration of digital assets into mainstream finance.

Previously, crypto ETFs operated under a cash-only model, which often led to inefficiencies and wider price discrepancies between ETFs and underlying assets. The new in-kind process, detailed in filings from Nasdaq, CBOE, and NYSE, enables direct on-chain transfers of Bitcoin and Ethereum between market makers and ETF providers [2]. This is expected to reduce slippage, narrow bid-ask spreads, and improve price tracking with the spot market, thereby attracting more institutional participation and liquidity [3].

The approval reflects a shift in regulatory posture under SEC Chair Paul Atkins, moving away from the cash-only approach enforced by former Chair Gary Gensler. This decision aligns with the broader pro-crypto stance of the Trump administration, which has recently passed several crypto-friendly bills, including the Genius Act [1]. The move coincides with a 12-day inflow streak into Bitcoin ETFs, which have seen $6.6 billion in net inflows, signaling strong institutional interest in crypto products [4].

However, the focus on Bitcoin and Ethereum has sparked debate over regulatory favoritism. Critics argue that altcoins like XRP and Solana, which lack similar ETF approvals, may be left behind. The ongoing SEC case against Ripple Labs has further fueled concerns about potential bias in regulatory treatment [5]. Analysts, including Bloomberg’s James Seyffart, suggest that the in-kind mechanism could eventually extend to altcoins, but only after further regulatory clarity [5].

The new framework is expected to benefit both ETF issuers and investors by increasing operational efficiency and reducing costs. It also paves the way for new product innovations, such as mixed BTC-ETH ETFs and expanded options trading on crypto assets [3]. As institutional investors gain access to more efficient tools, the market is anticipated to see a rise in inflows, reinforcing the role of crypto ETFs in portfolio diversification strategies.

This development marks a turning point in the maturation of the crypto market, bridging the gap between traditional finance and digital assets. While the focus on Bitcoin and Ethereum highlights the need for balanced regulation across the entire crypto ecosystem, the SEC’s decision signals a broader acceptance of crypto as a legitimate asset class within the financial system.

Sources:

[1] Bitcoin News Today: SEC Approves In-Kind Redemptions ... https://www.ainvest.com/news/bitcoin-news-today-sec-approves-kind-redemptions-bitcoin-ethereum-etfs-2507/

[2] In-Kind Bitcoin (BTC) and Ether (ETH) ETFs: How They Will ... https://www.coindesk.com/markets/2025/07/30/in-kind-bitcoin-and-ether-etfs-how-they-will-reshape-the-crypto-market

[3] SEC Greenlights In-Kind Crypto ETF Transactions, Major ... https://www.cryptoninjas.net/news/sec-greenlights-in-kind-crypto-etf-transactions-major-game-changer-for-bitcoin-ether-funds/

[4] The Game-Changer: In-Kind Redemptions in Crypto ETFs ... https://www.ainvest.com/news/game-changer-kind-redemptions-crypto-etfs-impact-institutional-adoption-2507/

[5] SEC Opens Door for In-Kind Redemptions in Crypto ETFs https://99bitcoins.com/news/bitcoin-btc/sec-approves-in-kind-redemptions-for-btc-and-eth-etfs/