BREAKING: SEC Approves In-Kind Bitcoin & Ethereum ETPs—Wall Street’s Crypto Play Just Got Real
The SEC just handed institutional investors the keys to the crypto kingdom—greenlighting in-kind creations and redemptions for Bitcoin and Ethereum ETPs. No more cash-only backdoors. This is the on-ramp Wall Street’s been waiting for.
The fine print they hope you’ll ignore: While the ruling dodges the spot ETF debate, it lets TradFi giants play with crypto without touching the messy stuff. How very… selective.
What changes today: Asset managers can now create and redeem shares using actual BTC and ETH—not just cash equivalents. Translation? Fewer arbitrage gaps, tighter spreads, and a smoother ride for whales.
Cynic’s corner: Watch banks suddenly ‘discover’ blockchain’s potential now that they can skim fees from both sides. The tech’s been here for 16 years, guys.
Bottom line: The dam’s cracking. Whether this floods the market with liquidity or just more paperwork depends on who’s holding the bucket.
Regulatory clarity for crypto markets
The US SEC announced in its press release on Tuesday that it has voted to approve orders to permit in-kind creations and redemptions by authorized participants for crypto ETP shares.
This order is a departure from the previous cash-only mechanism used for spot BTC and ETH ETPs, which were limited to creations and redemptions on an in-cash basis. This new development allows investors to receive the underlying asset, which is considered more efficient, as it enables the fund’s authorized participants to avoid selling the assets on the market, potentially reducing transaction costs. Moreover, it aligns crypto ETPs with traditional commodity-based ETPs, such as Gold and Oil.
SEC Chair Paul S. Atkins said, “I am pleased the Commission approved these orders permitting in-kind creations and redemptions for a host of crypto asset ETPs. Investors will benefit from these approvals, as they will make these products less costly and more efficient.”
Apart from this development, the Commission also voted to approve other orders that advance a merit-neutral approach to crypto-based products, including exchange applications seeking to list and trade an ETP that would hold mixed spot Bitcoin and spot Ether, options on certain spot Bitcoin ETPs, Flexible Exchange (FLEX) options on shares of certain BTC-based ETPs, and an increase of position limits up to the generic limits for options (up to 250,000 contracts) for listed options on certain BTC ETPs.
