Bitcoin News Today: SEC Rule Boosts Crypto ETF Efficiency as Bitwise Paces Institutional Integration

The U.S. Securities and Exchange Commission’s recent rule change has allowed crypto exchange-traded funds (ETFs) to engage in in-kind creations and redemptions, enabling direct swaps of Bitcoin and Ether tokens for ETF shares rather than cash [1]. This structural upgrade, first implemented by Bitwise Asset Management, aims to improve operational efficiency and reduce conversion fees, thus narrowing ETF price spreads without altering the retail investor experience [2]. Bitwise became the first U.S. crypto fund to adopt this new framework, signaling a shift toward greater institutional integration in the crypto ETF market [3].

The rule change aligns crypto ETFs with traditional financial products by standardizing creation and redemption mechanisms, a foundational element in traditional ETF operations [4]. Bitwise President Teddy Fusaro emphasized that this development places crypto funds on the “same foundation” as traditional ETFs, potentially facilitating deeper integration between digital assets and the broader financial system [5]. Despite these backend improvements, industry experts like Bloomberg’s Eric Balchunas note that retail investors will not be able to directly exchange ETF shares for actual cryptocurrencies [6].

The growing adoption of in-kind creation mechanisms is supported by strong institutional demand for Bitcoin. As of July 31, 2025, 12 U.S. Bitcoin ETFs collectively hold 1,299,401 BTC, representing 6.18% of the total Bitcoin supply [7]. The iShares Bitcoin Trust leads with 740,601 BTC, valued at approximately $87.66 billion, followed by Fidelity’s Wise Origin Bitcoin Fund with 205,864.2 BTC (~$24.37 billion) [8]. Bitwise’s Bitcoin ETF holds 40,638.7 BTC, valued at about $4.81 billion [9].

Regulatory developments, however, remain dynamic. On July 31, the SEC approved and then paused Bitwise’s proposal to convert its BITW fund into a spot Bitcoin ETF, highlighting ongoing tensions in the regulatory landscape for crypto investment products [10]. This action followed the approval of eleven spot Bitcoin ETFs earlier in the month, marking a significant step in institutional adoption. The competitive environment has intensified, with firms engaging in aggressive fee wars to attract investors [1]. While the regulatory environment is becoming more structured, the SEC’s cautious approach underscores its emphasis on innovation balanced with investor protection and market integrity [11].

The broader market remains in a state of flux, with Bitcoin hovering near key price levels as traders assess the impact of these developments on liquidity and fund inflows. The approval and subsequent pause of Bitwise’s application have added uncertainty, with market participants awaiting further clarity from the SEC on its long-term strategy for regulating digital asset funds [12]. The crypto market continues to show signs of institutional maturation as regulatory guardrails evolve [13].

Sources:

[1] Leap Digital Investments (https://leapdigitalinvestments.com.au)

[2] Bitwise Implements SEC’s Crypto ETF Rule Change, Signaling Potential Structural Improvements for Bitcoin Funds (https://en.coinotag.com/bitwise-implements-secs-crypto-etf-rule-change-signaling-potential-structural-improvements-for-bitcoin-funds/)

[3] Insights — TD Securities (https://www.tdsecurities.com/ca/en/insights)