SEC Greenlights In-Kind Redemptions for Spot Bitcoin & Ethereum ETFs – A Game Changer for Crypto Investors

The SEC just dropped a bombshell—spot Bitcoin and Ethereum ETFs can now handle in-kind redemptions. No more cash-only shackles. Wall Street’s playing catch-up, but crypto’s already three steps ahead.

Why it matters: Lower costs, tighter spreads, and fewer tax headaches. Traders win. The suits? They’ll still take their cut, obviously.

The fine print: This isn’t your grandpa’s ETF structure. In-kind redemptions mean actual crypto changes hands—not just IOUs. Finally, a bridge between TradFi rigor and DeFi’s wild efficiency.

Bottom line: The SEC’s stamp of approval just legitimized crypto’s seat at the big kids’ table. Now watch the inflows roll in—right after the usual hedge fund overcomplication, of course.

What in‑kind means

Under the new orders, authorized participants (APs) can deliver or receive BTC or ETH when creating or redeeming ETF shares. APs are typically large trading firms and banks. 

For most investors, trading will look the same, as the shares will still change hands on exchanges and track net asset value closely. As a result, the shift is structural, allowing APs to move crypto directly rather than sourcing or unwinding large cash positions. 

This enables funds to lower frictions, tighten spreads, and manage baskets more efficiently, especially in volatile markets.

Bloomberg’s Eric Balchunas wrote on X that the agency “just approved in‑kind creation/redemption for all spot bitcoin and ether ETFs,”that an “order granting accelerated approval” signals more decisions to come, potentially by early fall. 

James Seyffart predicted future altcoin ETFswith in‑kind from the start, which he called “more movement in the right direction.”