BREAKING: SEC Greenlights Bitcoin & Ethereum In-Kind ETFs – Is a Crypto ETF Avalanche Next?

The SEC just cracked open the door for institutional crypto adoption—hard. In-kind ETFs for Bitcoin and Ethereum are now live, and the market's already pricing in more approvals. Wall Street's playing catch-up, as usual.

Here's what you need to know:

The Big Picture: Regulators finally blinked. After years of foot-dragging, the SEC approved physically-backed crypto ETFs. No more synthetic exposure—these funds hold actual Bitcoin and Ethereum. TradFi purists are sweating.

Why It Matters: This isn't just about two coins. The floodgates could swing wide for other digital assets. Solana ETFs? Cardano exposure? The SEC's precedent just rewrote the rulebook.

The Catch: Don't break out the champagne yet. These approvals came with the SEC's signature bureaucratic asterisks—enough fine print to make a crypto lawyer rich. (Some things never change.)

One cynical footnote: Funny how these approvals arrived just as traditional finance firms finished building their crypto custody solutions. Coincidence? Please.

In-Kind ETFs Win Approval

Since President TRUMP took office, a wave of pro-crypto regulations has swept through the US. However, one particular demand has picked up steam in the last few months: in-kind ETFs.

Today, the SEC announced its final approval of this request, and Chairman Paul Atkins released a statement on the issue.

I'm pleased to share the SEC approved in-kind creations and redemptions for crypto ETPs. The approvals continue to build a rational regulatory framework for crypto, leading to a deeper and more dynamic market, which will benefit all American investors. https://t.co/UbQ9pXlBpD pic.twitter.com/DX8ub16Ey3

So, what is an in-kind crypto ETF? When the first bitcoin ETFs won approval under Gary Gensler, he aimed to cordon off these new products from potentially illicit BTC sources.

This meant forcing each issuer to buy the assets, and then investors WOULD purchase the financial instruments.

Under an in-kind model, buyers can bring the relevant tokens to an issuer to get the products directly. That process describes in-kind creation, but the reverse also applies to redemptions.

Investors still need to do business through licensed issuers, but these issuers don’t need to buy all the tokens themselves.

In other words, in-kind crypto ETFs would remove yet another legal obstacle to Web3. Cryptoassets are theoretically treated like commodities, but most types of commodities have this in-kind functionality.

So far, this rule change has yielded a universally positive response.

To be clear, the SEC didn’t offer a blanket approval to any sort of in-kind crypto ETF. Instead, it gave a green light to three specific proposals, all of which deal with Bitcoin and ethereum ETFs.

However, the Commission also mentioned an accelerated approval process, which may assist in-kind redemptions on altcoin products.

Additionally, the SEC is giving crypto ETFs another boon besides in-kind creation and redemption. ETF options trading is relatively new, especially for altcoins, but the Commission increased the position limit on IBIT options tenfold.

Already, ETF issuers are positively ecstatic about the new market opportunities.

An issuer just wrote me: "This is huge.. and will create explosion of option based bitcoin ETFs." https://t.co/z3UtoGucgd

All that is to say, the SEC is clearly in favor of crypto ETF liberalization despite recent approval delays. In-kind creation and redemption will put these products on the same level as any other commodity-based product.

Crypto ETF trade volumes are already high right now, but these new measures could send the momentum skyrocketing.