The U.S. Securities and Exchange Commission (SEC) has approved in-kind redemptions for spot Bitcoin and Ethereum ETFs, allowing fund managers to exchange ETF shares directly for crypto instead of cash.
The change will lower trading expenses, enhance efficiency, and make crypto ETFs equal to gold-backed funds. It signals a major regulatory shift that supports the growth of institutional crypto products while increasing investor confidence.
Bitcoin and Ethereum ETFs are investment funds that track the price of Bitcoin or Ethereum and trade on stock exchanges like traditional equities. In a press release, the SEC said authorized participants can now create and redeem ETF shares using actual Bitcoin or Ethereum.
SEC Chairman Paul S. Atkins posted on X that the update is part of a broader effort to create a “fit-for-purpose regulatory framework” for digital assets.
Jamie Selway, Director of the SEC’s Division of Trading and Markets, said, “The Commission’s decision today is an important development for the growing marketplace for crypto-based ETPs,” citing operational flexibility and cost savings for fund issuers and investors.
The SEC also approved options on spot Bitcoin ETFs, FLEX options, and a tenfold increase in position limits from 25,000 to 250,000 contracts. Bloomberg ETF analyst Eric Balchunas noted this could spark a surge in options-based crypto products.
ETF giants like BlackRock, the world’s largest asset manager, and Nasdaq, along with crypto investors and the broader financial market, are expected to benefit.
Bloomberg’s James Seyffart said future altcoin ETFs will likely launch with in-kind features. Nate Geraci of The ETF Store added, “It’s a new day at the SEC.”
The SEC is clearly opening doors for deeper crypto integration into traditional finance. This move sets the stage for broader adoption of digital asset ETFs.
Also Read: SEC Acknowledges BlackRock ETH ETF Staking Proposal
