Bitcoin News Today: SEC Approves In-Kind Mechanism for Crypto ETPs Boosting Efficiency

The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption mechanisms for all spot Bitcoin and Ether exchange-traded products (ETPs), marking a pivotal regulatory shift in the cryptocurrency investment landscape [1]. This move replaces the previous cash-only model and allows authorized participants to exchange ETF shares directly for Bitcoin or Ether, reducing transaction costs and improving operational efficiency [2]. The decision aligns crypto ETPs with traditional commodity-based ETF structures and reflects the SEC’s broader efforts to modernize its regulatory approach for digital assets [3].

The in-kind mechanism is expected to benefit a wide range of market participants, including issuers, market makers, and investors, by enabling more streamlined operations and reducing liquidity costs [4]. SEC Chairman Paul S. Atkins emphasized that the approval is a key step in developing a “fit-for-purpose” regulatory framework tailored to the evolving crypto market [5]. Jamie Selway, director of the Division of Trading and Markets, highlighted that the change enhances flexibility and cost savings across the investment ecosystem [6].

In addition to the in-kind approval, the SEC has authorized mixed Bitcoin-Ether ETPs and expanded position limits for crypto-linked options up to 250,000 contracts [7]. These moves signal the SEC’s commitment to aligning crypto asset markets with conventional financial regulations and operational standards. The agency also issued scheduling orders to facilitate the listing of large-cap crypto ETPs and invited public comment on related proposals, indicating a proactive stance toward market development [8].

The approval comes at a time of growing demand for crypto investment products. U.S. spot Bitcoin ETFs have seen a 12-day inflow streak, adding $6.6 billion in assets and securing over 1.298 million BTC in holdings [9]. Ethereum-based ETPs have also gained traction, with BlackRock’s iShares Ethereum ETF surpassing $10 billion in assets within 251 days [10]. These trends suggest strong investor confidence in crypto assets and highlight the potential for further growth with the implementation of more efficient structures.

The decision contrasts with the regulatory challenges at the Commodity Futures Trading Commission (CFTC), where leadership remains unresolved due to the delayed confirmation of Brian Quintenz’s nomination [11]. This delay has created a leadership vacuum at the CFTC during a critical period for crypto regulation in the U.S. As the SEC continues to refine its approach, the crypto market’s regulatory environment appears increasingly aligned with the broader financial sector, potentially accelerating mainstream adoption and investment.

Source: [1] SEC.gov (https://www.sec.gov/newsroom/press-releases/2025-101-sec-permits-kind-creations-redemptions-crypto-etps)

[2] Markets (https://www.marketsmedia.com/sec-approval-of-in-kind-creations-redemptions-for-crypto-etps-is-huge/)

[3] Coinpaper (https://coinpaper.com/10260/sec-approves-in-kind-redemptions-for-crypto-et-ps)

[4] ZyCrypto (https://zycrypto.com/sec-approves-in-kind-redemptions-for-all-bitcoin-and-ethereum-etfs-marking-major-regulatory-shift/)

[5] Baystreet.ca (https://www.baystreet.ca/articles/cryptonews.aspx?articleid=113521)

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