Bitcoin News Today: SEC approves in-kind creation and redemption for crypto ETFs marking regulatory shift

The U.S. Securities and Exchange Commission has approved in-kind creation and redemption mechanisms for all spot Bitcoin and Ethereum exchange-traded funds, marking a significant regulatory shift in the treatment of cryptocurrencies within the financial system. The decision permits institutional investors to exchange the underlying digital assets directly for ETF shares, replacing the previous cash-based model. This development is expected to improve market efficiency, reduce transaction costs, and enhance liquidity for participants [1][2].

The move represents a departure from earlier SEC practices, where, although not explicitly prohibited, in-kind mechanisms were effectively discouraged in the initial filings of crypto ETFs. ETF sponsors were advised to omit such provisions, which limited the flexibility of the funds. Now, authorized participants can directly deliver or receive Bitcoin and Ether when issuing or redeeming shares. This change is seen as a key step toward institutional normalization of crypto markets [3][4].

Chairman Paul Atkins highlighted the decision as part of a broader effort to create a regulatory framework that supports the evolving crypto asset class. “A key priority of my chairmanship is developing a fit-for-purpose regulatory framework for crypto asset markets,” Atkins stated, emphasizing the benefits for investors, including lower costs and improved efficiency [5].

Bloomberg ETF analyst Eric Balchunas noted the significance of the SEC’s “order granting accelerated approval,” signaling that more ETF approvals may follow in the coming months. His colleague James Seyffart added that the approval sets a precedent for future ETFs tracking other cryptocurrencies, which may include in-kind mechanisms from the outset. “More movement in the right direction IMO,” Seyffart remarked [6][7].

The approval is also seen as part of a broader trend toward more favorable regulatory treatment of crypto, driven in part by the Trump administration’s supportive stance. With institutional adoption accelerating, the new in-kind redemption model could facilitate the deeper integration of digital assets into traditional financial systems [8].

Sources:

[1] SEC Approves In-Kind Redemptions for All Spot Bitcoin ...

https://www.coindesk.com/markets/2025/07/29/sec-approves-in-kind-redemptions-for-all-spot-bitcoin-ethereum-etfs

[2] Bitcoin News Today: SEC Approves In-Kind Redemptions ...

https://www.ainvest.com/news/bitcoin-news-today-sec-approves-kind-redemptions-bitcoin-ethereum-etps-2507/

[3] SEC's in-kind approval can spark HUGE $710 billion ...

https://cryptoslate.com/secs-in-kind-approval-can-spark-huge-710-billion-supply-squeeze-for-bitcoin-etfs/

[4] SEC Approves In-Kind Redemptions For All Bitcoin And ...

https://zycrypto.com/sec-approves-in-kind-redemptions-for-all-bitcoin-and-ethereum-etfs-marking-major-regulatory-shift/

[5] The SEC approves creation and in-kind redemption for ...

https://news.bit2me.com/en/SEC-approves-creation-and-redemption-of-spot-ETFs-for-Bitcoin-and-Ether

[6] SEC Approves in-kind Creation and Redemption for Crypto ...

https://cryptodnes.bg/en/sec-approves-in-kind-creation-and-redemption-for-crypto-etps-marking-regulatory-shift/

[7] Crypto Just Got Institutional: SEC Eliminates Key ETF Friction

https://medium.com/@carlosdesantiago/crypto-just-got-institutional-sec-eliminates-key-etf-friction-7c586886f0ee