SEC Approves In-Kind Redemptions for Crypto ETPs

This allows authorized participants to swap ETF shares directly for Bitcoin or Ethereum instead of cash. This also is expected to reduce transaction costs and increase market efficiency. SEC Chairman Paul Atkins described the change as part of a broader strategy to create a modern, purpose-built regulatory framework for digital assets. Meanwhile, the Senate Agriculture Committee once again delayed a hearing on Brian Quintenz’s nomination to chair the Commodity Futures Trading Commission (CFTC), after a White House request. The delay adds uncertainty to the CFTC’s future leadership at a time when crypto regulatory oversight is under review in Congress.

SEC Eases Crypto ETF Rules

The US Securities and Exchange Commission (SEC) approved in-kind creation and redemption for cryptocurrency exchange-traded products (ETPs). This is a huge milestone in the evolution of regulated crypto investment vehicles. This new allowance makes it possible for authorized representatives to exchange shares of approved Bitcoin and Ethereum funds directly for the underlying crypto assets rather than using. The move is expected to reduce transaction costs and improve market efficiency. 

Press release from the SEC

SEC Chairman Paul Atkins classified the development as part of a broader strategy to create a fit-for-purpose regulatory framework for digital assets, and stated that the change will make crypto ETPs “less costly and more efficient.” Jamie Selway, director of the SEC’s Division of Trading and Markets, explained that in-kind redemptions offer more flexibility and cost savings for issuers, participants, and investors.

Until now, crypto ETFs approved by the SEC, including spot Bitcoin and Ethereum ETFs, were limited to cash-only redemption mechanisms. However, regulatory sentiment has gradually shifted. 

At the Bitcoin Policy Institute conference last month, SEC Commissioner Hester Peirce acknowledged the rising demand for in-kind redemptions. This regulatory pivot is also part of a much broader policy shift toward the digital asset industry, which was encouraged by the Trump administration’s support for crypto innovation and the recent passage of three key Congressional bills focusing on market structure, stablecoins, and restrictions on surveillance-based central bank digital currencies.

So far, the industry responded positively to the announcement, with crypto ETFs continuing to see rising demand. US spot Bitcoin ETFs recently posted a 12-day streak of inflows totaling $6.6 billion, bringing their collective holdings to over 1.298 million BTC, which is worth approximately $152.1 billion. Ethereum ETFs are also gaining momentum, with BlackRock’s iShares Ethereum ETF reaching over $10 billion in assets in just 251 days. 

Now, the SEC’s approval of in-kind mechanisms is likely to accelerate this growth, and could be the start of a new era of more efficient and investor-friendly crypto investment products.

Senate Delays Quintenz CFTC Vote Again

While the SEC is moving quickly and making changes, the same cannot be said for the Commodity Futures Trading Commission (CFTC). The US Senate Agriculture Committee postponed a planned hearing on Brian Quintenz’s nomination to chair the CFTC, after a request from the White House just days before lawmakers leave for their August recess. 

The delay was confirmed in an update by Committee Chair John Boozman and Ranking Member Amy Klobuchar, and is the second time the committee pushed back consideration of Quintenz’s nomination. The vote was initially expected during a July 21 meeting, and then again before the Aug. 4 recess, but was removed from the schedule without a new date set.

A spokesperson for the committee stated that the decision came directly from the White House, though no official comment was received from the administration. Brian Quintenz previously served as a CFTC commissioner from 2017 to 2021 under Trump and was originally nominated by President Obama. He also disclosed approximately $3.4 million in assets and faced questioning during a June hearing before the same committee.

The uncertainty around his confirmation comes at a critical time, as the Senate prepares to take up legislation in September that is specifically aimed at defining regulatory responsibilities between the CFTC and the SEC over digital assets. Quintenz is considered crypto-friendly, and his appointment could have major implications for the future of digital asset policy in the US, especially as the SEC under the Trump administration dropped a number of high-profile crypto enforcement actions after former Chair Gary Gensler’s departure.

Brian Quintenz

The CFTC is also facing a leadership vacuum, with three of its five commissioners—former chair Rostin Behnam, Summer Mersinger, and Christy Goldsmith Romero—already having left their positions. Acting Chair Caroline Pham also suggested that she would step down if Quintenz were confirmed, and Kristin Johnson is expected to leave before 2026. 

(Source: CFTC)

So far, Trump did not announce replacements for the four seats that would be vacant after Quintenz’s potential confirmation. This leaves the future leadership of the CFTC in flux at a very pivotal moment for crypto regulation.