SEC Says Yes to In-Kind BTC & ETH ETF Transactions
The SEC just dropped a major policy shift that could reshape how institutions interact with crypto ETFs. With in-kind redemptions now approved for all spot BTC and ETH ETFs, the door is wide open for more efficient, crypto-native ETF flows.
- SEC approves in-kind creation/redemption for all spot Bitcoin & Ethereum ETFs
- First crypto-friendly move under new SEC Chair Paul Atkins
- Institutions can now use BTC/ETH directly, no need for cash conversions
- Position limits raised for options on BlackRock’s IBIT ETF
- Big unlock for institutional arbitrage, hedging, and ETF efficiency
On July 30, the SEC officially approved in-kind creation and redemption for all spot Bitcoin and Ethereum ETFs – a big deal for institutional players who no longer need to rely on cash to move in and out of ETF shares.
SEC approves in-kind creations and redemptions for Bitcoin and Ethereum ETFs. Souce: Cointelegraph on X.
Instead of converting assets back and forth between fiat and crypto, authorized participants (the big institutions providing ETF liquidity) can now directly use BTC or ETH to create or redeem shares. This educes friction, improves efficiency, and aligns ETF flows more closely with actual market demand.
This marks the first major crypto-friendly decision under the new SEC Chair Paul Atkins, known for his more market-friendly stance. And it sends a clear signal: the U.S. is starting to treat crypto assets more like traditional financial instruments.
Atkins himself put it simply: “It’s a new day at the SEC.” He emphasized that the move will make crypto ETFs cheaper and more efficient for investors.
The shift also comes on the heels of BlackRock’s request back in January to allow in-kind transactions for its iShares Bitcoin Trust (IBIT). Other big names like Fidelity and ARK Invest quickly followed. Until now, all spot BTC ETFs operated with cash-only redemptions, which added operational headaches and limited flexibility.
But that’s not all. The SEC also approved higher position limits for options trading on IBIT, allowing traders to hold bigger positions in BTC ETF options. That’s a clear nod of confidence in the liquidity and maturity of the Bitcoin ETF space and gives institutions more room to hedge or speculate.
Overall, this is a huge win for efficiency and could open the door for more sophisticated strategies in both BTC and ETH ETFs. Fewer roadblocks, smoother flows, and possibly, more demand from traditional finance.
To sum it up:
The SEC just greenlit in-kind ETF flows for BTC and ETH – a major unlock for institutional players, signaling that crypto is moving deeper into the mainstream.
