Bitcoin News Today: SEC Approves In-Kind Creations for Crypto ETPs Boosting Efficiency and Liquidity

The U.S. Securities and Exchange Commission has approved the use of in-kind creations and redemptions for crypto asset exchange-traded products (ETPs), a move that marks a significant step toward more efficient market operations for digital assets. Under the new rules, authorized participants can now exchange ETP shares for the underlying assets—such as Bitcoin and Ethereum—without relying solely on cash transactions. This development brings crypto ETPs closer to the structure of traditional commodity ETFs and is expected to enhance transparency and liquidity in the market [1].

Previously, the SEC had restricted in-kind mechanisms for crypto ETPs, expressing concerns over compliance risks and the potential for misuse by broker-dealers involved in asset handling [3]. The recent decision signals that these issues have been resolved, and the Commission now views the process as a tool to reduce costs and improve operational efficiency [4]. The shift is also seen as part of the SEC’s broader, more accommodating regulatory approach under the current administration [6].

The approval is anticipated to have a direct impact on institutional investors and ETP providers. By enabling direct asset exchanges, the rule reduces intermediary frictions and price distortions, making it easier for ETPs to manage exposure at lower costs [5]. This is likely to improve arbitrage efficiency and reduce slippage, benefiting both institutional and retail investors [7]. The change also aligns with the SEC’s goal of creating a regulatory framework that supports innovation while maintaining market integrity and investor protection [8].

The decision does not introduce new regulatory standards but modifies existing rules to better suit the unique characteristics of crypto assets. As digital assets continue to integrate into traditional financial systems, this move is expected to encourage broader adoption of crypto ETPs and foster further innovation in the space. Market observers suggest that the approval could also influence future legislative efforts by Congress, which has been working on clearer oversight and standards for digital assets.

Overall, the SEC’s ruling is a foundational shift in the structure of the crypto ETP market, offering a more efficient and cost-effective mechanism for asset management. It reflects the Commission’s growing recognition of the maturation of the digital asset sector and its willingness to adapt regulatory frameworks accordingly. The impact is expected to extend beyond Bitcoin and Ethereum to other cryptocurrencies as more ETPs are developed and listed under the new rules [1].

Source:

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

[2] Yahoo, SEC Approves In-Kind Crypto ETF Redemptions (https://finance.yahoo.com/news/sec-approves-kind-crypto-etf-201500418.html)

[3] Citywire, 'A new day at the SEC': Regulator approves in-kind ... (https://citywire.com/pro-buyer/news/a-new-day-at-the-sec-regulator-approves-in-kind-creations-and-redemptions-for-crypto-etfs/a2471198)

[4] SEC.gov, Statement on the Commission's Approval of In-Kind ... (https://www.sec.gov/newsroom/speeches-statements/uyeda-statement-crypto-exchange-traded-products-072925)

[5] Ledger, SEC allows in-kind crypto ETF redemptions impacting bank ... (https://www.ledgerinsights.com/sec-allows-in-kind-crypto-etf-redemptions-impacting-bank-indirect-exposures/)

[6] Bloomberg, SEC Authorizes Use of In-Kind Redemptions for Crypto ETPs (https://www.bloomberg.com/news/articles/2025-07-29/a-quiet-sec-rule-shift-brings-crypto-etfs-closer-to-mainstream)

[7] CoinDesk, 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)

[8] Cointelegraph, SEC approves in-kind creations and redemptions for crypto ... (https://cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps)