Bitcoin News Today: SEC approves in-kind creation/redemption for Bitcoin, Ethereum ETPs, boosting efficiency

The U.S. Securities and Exchange Commission (SEC) has finalized a regulatory update permitting in-kind creation and redemption for cryptocurrency exchange-traded products (ETPs), marking a significant shift in the oversight of digital asset markets [1]. The decision, announced on July 18, 2025, authorizes Bitcoin (BTC) and Ether (ETH) ETPs to allow authorized participants to exchange crypto assets directly for ETP shares or redeem shares for the underlying digital assets, bypassing cash transactions [2]. This mechanism, long used in traditional equity and commodities markets to reduce costs and enhance liquidity [3], now extends to crypto ETPs, aligning them with established financial practices.

SEC Chairman Paul Atkins highlighted the move as a step toward modernizing regulatory frameworks for crypto markets, emphasizing its potential to make ETPs “less costly and more efficient” [4]. The rule change addresses prior limitations of cash-based processes, which introduced friction in large-scale transactions and could widen price discrepancies between ETPs and their underlying assets. By enabling in-kind exchanges, the agency aims to streamline operations for issuers, authorized participants, and investors, fostering a more seamless trading environment [3].

The development reflects the SEC’s evolving stance on crypto markets, particularly after recent approvals of spot Bitcoin and Ethereum ETFs. However, the current rule is narrowly focused on BTC and ETH ETPs, with the SEC offering no explicit guidance on expanding the framework to other cryptocurrencies [1]. This specificity suggests a measured approach, prioritizing stability for established assets while leaving room for future adjustments. The timeline of approvals also indicates internal deliberation: the rule proposal was announced on June 30, 2025, but final approval took nearly a month, underscoring the agency’s caution in balancing innovation with risk mitigation [2].

Market participants view the update as a catalyst for broader institutional adoption. In-kind redemptions reduce operational hurdles for large investors, making it easier to manage liquidity in volatile crypto markets. The mechanism also sets a precedent for ETP structures, potentially encouraging the development of products tied to other digital assets. Analysts note, however, that the impact may vary depending on broader market conditions. For instance, Bitcoin’s price has remained resilient despite regulatory developments, suggesting that macroeconomic factors continue to dominate investor sentiment [5].

The SEC’s decision underscores its role in adapting traditional market infrastructure to accommodate crypto innovation. By extending in-kind processes to ETPs, the agency signals a commitment to integrating digital assets into existing financial systems. Yet, the absence of clear guidance on future asset eligibility or participant requirements leaves room for interpretation, which could influence how asset managers design new products. This ambiguity highlights the ongoing tension between regulatory oversight and market dynamism.

Sources:

[1] [SEC.gov: SEC Permits In-Kind Creations and Redemptions for Crypto ETPs](https://www.sec.gov/newsroom/press-releases/2025-101-sec-permits-kind-creations-redemptions-crypto-etps)

[2] [TheBlock.co: SEC approves in-kind redemptions for spot Bitcoin and Ethereum ETFs](https://www.theblock.co/post/364703/sec-approves-in-kind-redemptions-for-spot-bitcoin-and-ethereum-etfs-increases-options-limits)

[3] [Cointelegraph: SEC votes to allow in-kind redemptions for crypto ETPs](https://cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps)

[4] [ADVFN: SEC Chair Paul Atkins comments on new rules](https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96518508/sec-votes-to-allow-in-kind-redemptions-for-crypto)

[5] [ADVFN: Bitcoin price analysis post-SEC decision](https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96512522/bitcoin-price-shrugs-off-potential-new-450m-galax)