Bitcoin News Today: SEC approves in-kind redemptions for Bitcoin Ethereum ETPs, aligning with traditional commodity models

The U.S. Securities and Exchange Commission has approved in-kind creation and redemption mechanisms for Bitcoin and Ethereum exchange-traded products (ETPs), marking a pivotal regulatory development in the cryptocurrency sector. This decision, announced on July 1, 2025, enables authorized participants to exchange ETP shares directly for the underlying digital assets—Bitcoin or Ethereum—rather than relying on cash settlements [1]. The ruling applies to spot ETFs and options linked to these funds, with major exchanges like Nasdaq, NYSE Arca, and Cboe supporting the new framework for issuers including BlackRock, Ark 21Shares, Fidelity, and VanEck [2].

The shift aligns crypto ETPs with traditional commodity ETPs, which have long used in-kind mechanisms to reduce transaction costs and market impact. By allowing direct asset transfers, the SEC’s move addresses a structural inefficiency that previously forced firms to liquidate holdings during redemptions, often exacerbating market volatility [3]. SEC Chair Paul Atkins highlighted the decision as part of a “rational regulatory framework for crypto,” emphasizing its potential to foster a “deeper and more dynamic market.” Jamie Selway, the SEC’s Director of Trading and Markets, added that the change offers “flexibility and cost savings” across the industry [4].

Analysts and industry participants have welcomed the development, noting its alignment with established practices in traditional finance. James Seyffart, a Bloomberg ETF analyst, observed that the shift could streamline future product launches for alternative cryptocurrencies, as in-kind redemptions become a standard feature in ETF structures [5]. The approval follows months of industry advocacy, with ETF issuers arguing that direct asset transfers enhance efficiency and reduce operational costs. Critics, however, have criticized the SEC’s delayed action—lasting over 19 months—as a barrier to market innovation. One industry analyst described the regulatory holdup as “ridiculous,” pointing to lost opportunities for investor access and market efficiency [6].

The decision is expected to benefit institutional investors and market makers—known as authorized participants—who play a critical role in maintaining ETF liquidity. By minimizing the need to buy or sell large quantities of crypto assets during redemptions, the process could stabilize pricing and reduce arbitrage opportunities [7]. While retail investors won’t see immediate changes, the move may attract institutional capital, which has historically favored products with lower volatility and clearer risk profiles.

Despite the progress, challenges persist. The SEC has yet to finalize rulings on other crypto ETF proposals, including those tied to Solana and Grayscale’s conversion to a ETF structure. A recent review of a Solana spot ETF proposal, which includes staking rewards, suggests the agency is still evaluating innovative structures [8]. Additionally, delays in decisions for Truth Social and Grayscale ETFs—filed separately—indicate ongoing regulatory scrutiny of the sector [9].

The in-kind redemption mechanism represents a step toward normalizing crypto assets within traditional financial systems. By adopting a model used for gold and oil ETPs, the SEC has signaled its recognition of crypto’s legitimacy as an asset class. This could pave the way for expanded product offerings, provided they meet evolving regulatory standards. Analysts will now monitor whether the SEC extends similar rules to altcoins beyond Bitcoin and Ethereum, a move that could further accelerate market adoption.

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Sources:

[1] Crypto Briefing, [https://cryptobriefing.com/sec-approves-in-kind-redemptions-bitcoin-ethereum-etfs/](https://cryptobriefing.com/sec-approves-in-kind-redemptions-bitcoin-ethereum-etfs/)

[2] U.Today, [https://u.today/breaking-sec-approves-in-kind-redemptions-for-bitcoin-and-ethereum-etfs](https://u.today/breaking-sec-approves-in-kind-redemptions-for-bitcoin-and-ethereum-etfs)

[3] Cointelegraph, [https://es.cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps](https://es.cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps)

[4] Cointelegraph, [https://es.cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps](https://es.cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps)

[5] Bloomberg ETF analyst James Seyffart, [https://u.today/breaking-sec-approves-in-kind-redemptions-for-bitcoin-and-ethereum-etfs](https://u.today/breaking-sec-approves-in-kind-redemptions-for-bitcoin-and-ethereum-etfs)

[6] Coin Edition, [https://coinedition.com/expert-slams-sec-delay-bitcoin-etf-in-kind-redemption/](https://coinedition.com/expert-slams-sec-delay-bitcoin-etf-in-kind-redemption/)

[7] Cointelegraph, [https://es.cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps](https://es.cointelegraph.com/news/sec-in-kind-redemptions-crypto-etps)

[8] The CurrencyAnalytics, [https://thecurrencyanalytics.com/altcoins/cboe-pushes-for-invesco-galaxy-solana-etf-listing-adds-staking-rewards-187872](https://thecurrencyanalytics.com/altcoins/cboe-pushes-for-invesco-galaxy-solana-etf-listing-adds-staking-rewards-187872)

[9] The Cryptotimes, [https://www.cryptotimes.io/2025/07/29/sec-delays-decision-on-truth-social-and-grayscale-crypto-etfs/](https://www.cryptotimes.io/2025/07/29/sec-delays-decision-on-truth-social-and-grayscale-crypto-etfs/)