SEC approves crypto ETPs holding $152B in assets

The US Securities and Exchange Commission (SEC) has authorised in-kind creation and redemption for crypto exchange-traded products (ETPs) involving Bitcoin (CRYPTO:BTC) and Ether (CRYPTO:ETH).

This update permits authorised participants to exchange shares directly for the underlying crypto assets rather than cash.

"Fit-for-purpose regulatory framework for crypto asset markets" and making crypto ETPs "less costly and more efficient" are key goals of the new framework, according to SEC Chair Paul Atkins.

"In-kind creation and redemption provide flexibility and cost savings to ETP issuers, authorised participants, and investors, resulting in a more efficient market," stated Jamie Selway, director of the SEC’s Division of Trading and Markets.

Previously, the SEC only allowed cash redemptions when approving spot Bitcoin and Ether ETFs in 2024.

In-kind redemptions enable investors to receive the actual assets instead of cash, which can reduce transaction costs by avoiding asset sales on the market at redemption.

Increasing momentum towards in-kind mechanisms was noted at a recent Bitcoin Policy Institute conference, where SEC Commissioner Hester Peirce signalled potential approval soon.

This development coincides with broader policy support for the crypto sector, following Congressional passage of three bills targeting market structure, stablecoin regulation, and restrictions on a central bank digital currency.

US spot Bitcoin ETFs have experienced a 12-day inflow run, collecting $6.6 billion in new assets.

Current holdings across US Bitcoin ETFs exceed 1.298 million BTC, worth approximately $152.1 billion.

The Ether ETF market is also expanding; BlackRock’s iShares Ethereum ETF surpassed $10 billion in assets within 251 days of launch.

According to the SEC press release, this change marks a notable regulatory shift supporting crypto investment products within the US financial system.

At the time of reporting, BTC price was $117,836.