SEC Approves In-Kind Redemptions for All Spot Bitcoin and Ethereum ETFs, Easing Institutional Access
The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption for all spot bitcoin (BTC) and ethereum (ETH) ETFs, a pivotal change that allows large institutional participants to directly exchange ETF shares for crypto assets rather than cash.
The move streamlines ETF operations by enabling authorized participants—typically large market makers—to manage share creation and redemption in BTC or ETH, reducing inefficiencies caused by fiat conversions. The change is widely seen as enhancing liquidity, reducing tracking error, and improving cost efficiency for investors.
This marks the SEC’s first major crypto-forward policy initiative under Chair Paul Atkins, who took office earlier this year.
“It’s a new day at the SEC,” Atkins said in a statement. “A fit-for-purpose regulatory framework is essential for the future of crypto markets. These in-kind approvals will help make crypto ETFs more efficient and accessible.”
The approval follows earlier requests from issuers including BlackRock, Fidelity, and Ark Invest to enable in-kind transactions across their digital asset products. Until now, spot BTC ETFs approved since January 2024 operated under a cash-only model, which market participants viewed as a key operational constraint.
In addition to the in-kind approval, the SEC also raised position limits for options tied to BlackRock’s iShares Bitcoin Trust (IBIT), allowing investors to hold larger options positions in the fund. The adjustment reflects the regulator’s growing confidence in the market’s depth and maturity.
Position limits are typically used to reduce excessive speculation and risk concentration. Raising these thresholds signals a shift toward treating crypto ETFs on par with traditional financial products.
The combined changes are expected to boost institutional involvement in both BTC and ETH ETFs by lowering friction for trading, hedging, and arbitrage strategies.
Under Atkins’ leadership, the SEC appears to be embracing a more constructive regulatory stance, aligning crypto asset products more closely with the frameworks governing legacy markets.
