Ethereum News Today: SEC approves in-kind creation for Bitcoin and Ethereum ETPs

The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption mechanisms for exchange-traded products (ETPs) tracking Bitcoin and Ethereum, a development that marks a significant regulatory shift in the structure of crypto-related investment vehicles [1]. The move enables authorized participants to create or redeem ETP shares using the underlying cryptocurrencies, rather than cash, aligning the process with traditional commodity and equity ETF structures [2]. This is expected to enhance operational efficiency, reduce market frictions, and improve liquidity for the crypto ETP market [3].

The approval applies across all spot Bitcoin and Ethereum ETPs in a coordinated, class-wide manner, ensuring a level playing field among providers and reinforcing the SEC’s approach to treating crypto ETPs as part of the broader financial market infrastructure [2]. The decision was described as a step toward reducing “market asymmetries and inefficiencies” that had previously characterized cash-only ETP structures, according to SEC Commissioner Mark T. Uyeda [3].

The shift is likely to have several key effects. First, it reduces reliance on cash transactions, which can be less efficient, especially during times of high volatility [4]. By allowing institutional participants to exchange actual crypto assets for ETP shares, the mechanism supports faster and more cost-effective operations, potentially leading to tighter bid-ask spreads and improved price discovery [3]. This could also reduce the likelihood of large premiums or discounts that often occur in cash-based ETPs due to the mismatch between the ETF’s net asset value and the underlying crypto price [4].

The approval also reinforces the growing regulatory convergence between traditional and crypto markets. By adopting a structure used in equity ETFs, the SEC is signaling increased comfort with the infrastructure and custodial frameworks supporting these products [2]. This follows the approval of the first spot Bitcoin ETFs in January 2025, further solidifying the regulatory foundation for institutional participation in the crypto space [6].

Analysts have suggested that the decision supports a more stable and mature environment for crypto ETPs [4]. While it may not immediately trigger large inflows, the long-term impact is expected to be positive by attracting a wider range of investors who previously may have been deterred by inefficiencies or regulatory uncertainty. The move is also aligned with broader regulatory clarity on crypto-related activities, including developments in liquid staking, which has contributed to a more favorable investment climate [4].

Source:

[1] SEC Finally Approves In-kind Creations and Redemptions for Spot Crypto ETFs – [https://cryptorank.io/news/feed/5a08a-sec-finally-approves-in-kind-creations-and-redemptions-for-spot-crypto-etfs](https://cryptorank.io/news/feed/5a08a-sec-finally-approves-in-kind-creations-and-redemptions-for-spot-crypto-etfs)

[2] CF Benchmarks Newsletter – [https://www.cfbenchmarks.com/blog/cf-benchmarks-newsletter-issue-88](https://www.cfbenchmarks.com/blog/cf-benchmarks-newsletter-issue-88)

[3] ETH Rally: How Institutional Money Sparked 19% Weekly Surge – [https://aurpay.net/aurspace/ethereum-surge-institutional-flows-regulatory-clarity/](https://aurpay.net/aurspace/ethereum-surge-institutional-flows-regulatory-clarity/)

[4] In-kind Redemptions for ARK 21Shares Bitcoin and Ethereum ETFs – [https://webplus.com/post/thecoinrise.com-_-cboe-proposes-in-kind-redemptions-for-ark-21shares-bitcoin-and-ethereum-etfs](https://webplus.com/post/thecoinrise.com-_-cboe-proposes-in-kind-redemptions-for-ark-21shares-bitcoin-and-ethereum-etfs)

[6] Should You Buy Polkadot While It's Under $5? – [https://www.aol.com/buy-polkadot-while-under-5-112300820.html](https://www.aol.com/buy-polkadot-while-under-5-112300820.html)