SEC Considers Physical Redemption in Crypto ETFs Approval – Coincu

Hester Peirce, an SEC member, indicated that the SEC is reviewing the feasibility of physical redemption for cryptocurrency ETFs, with companies like BlackRock showing significant interest, according to The Block.

Hester Peirce’s comments highlight potential market changes as ETF structures may evolve, affecting transaction costs and liquidity.

SEC Explores In-Kind Redemption for Crypto ETFs

SEC Commissioner Hester Peirce addressed the potential introduction of a physical redemption mechanism for cryptocurrency ETFs at a recent panel discussion. This mechanism allows ETFs to be purchased and redeemed in-kind instead of using cash, drawing interest from major industry players.

Such reform in ETF mechanics promises to reduce costs related to transactions and slippage, increasing efficiency and liquidity in the crypto market. Should the SEC approve, it could lead to increased institutional participation in the ETF market. As Peirce noted, “These (forms) are currently under review. So I think that at some point, the physical subscription and redemption mechanism will definitely come. I can’t judge in advance, but we have heard that many companies are very interested in this.”

Market reactions have been positive, with expectations of improved ETF efficiency. Peirce mentioned that significant industry interest is already being observed, as companies anticipate possible changes in SEC regulations and preparations for new investment structures.

Evolving ETF Structures Could Boost Crypto Liquidity

Did you know? The potential shift in cryptocurrency ETF structures is reminiscent of changes made to gold ETFs, which significantly improved liquidity and market reach once in-kind redemption was allowed.

According to CoinMarketCap, as of 00:20 UTC on June 26, 2025, Bitcoin (BTC) is priced at $107,576.83, with a market cap of $2.14 trillion and a market dominance of 64.94%. Its trading volume in the past 24 hours was $50.39 billion, reflecting a 1.21% gain over the last day.

Coincu research suggests that if similar positive outcomes occur as experienced by other commodities like gold, cryptocurrencies could see enhanced market efficiency and liquidity, potentially paving the way for increased cross-chain investment opportunities.