SEC Approves In-Kind Creation and Redemption for Bitcoin, Ether ETFs

The U.S. Securities and Exchange Commission on 29 July granted accelerated approval to rule changes from Nasdaq, Cboe and NYSE that permit in-kind creations and redemptions for all spot Bitcoin and Ethereum exchange-traded funds.

The move allows authorised participants—large banks and trading firms—to exchange ETF shares directly for the underlying tokens rather than cash. Aligning crypto funds with long-standing commodity ETP practices, the change is expected to lower costs, tighten bid-ask spreads and deepen liquidity, making the products more attractive to institutional investors.

SEC Chair Paul Atkins called the decision “a new day at the SEC,” saying it advances the agency’s effort to build a fit-for-purpose regulatory framework for digital assets. The Commission also lifted position limits on certain Bitcoin options to the standard 250,000-contract cap and approved listings for mixed Bitcoin-and-Ether ETPs and related options.

Analysts expect future crypto-asset ETFs, including potential offerings based on additional tokens, to launch with in-kind functionality from the outset, further reducing barriers for mainstream adoption of digital-asset investment products.

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