A major regulatory shift has arrived in the U.S. crypto market. The SEC has approved in-kind redemptions for spot Bitcoin and Ethereum ETFs, allowing funds to exchange real crypto rather than cash.
This puts digital asset ETFs on the same footing as gold-backed products—a move long-awaited by the industry.
Under the new rule, authorized participants can now create or redeem ETF shares using Bitcoin or Ethereum directly. This not only simplifies ETF operations but also lowers costs and aligns crypto ETFs with traditional commodity funds. SEC Chair Paul Atkins described the update as part of a broader mission to craft rules that better reflect the realities of digital finance.
Jamie Selway, head of the agency’s trading division, emphasized that the decision unlocks greater flexibility and efficiency across the ETF ecosystem. Meanwhile, Nasdaq’s recent filing to allow staking in Ethereum ETFs signals even broader innovation is on the horizon.
The update didn’t stop there. The SEC also approved new options trading for Bitcoin ETFs, increasing position limits tenfold—from 25,000 to 250,000 contracts. Analysts say this will significantly expand the derivatives market, with Bloomberg’s Eric Balchunas calling it a “massive catalyst” for growth in option-based crypto products.
With these changes taking effect immediately, expectations are rising for similar treatment of future altcoin ETFs. Bloomberg’s James Seyffart noted that in-kind mechanisms will likely be standard from the start for upcoming products. The SEC’s evolving stance is seen as a direct response to mounting pressure for fair treatment of digital assets under U.S. financial law.
As ETF Store President Nate Geraci put it, “It’s a new day at the SEC.”
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/sec-resets-the-rules-bitcoin-and-ethereum-etfs-can-now-settle-in-crypto/