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SEC approves in-kind redemptions for Bitcoin and Ethereum ETFs

The SEC has allowed in-kind swaps for crypto ETFs, enhancing efficiency for institutional investors.

July 30, 2025 at 01:02 PM

‘It’s a new day’: SEC approves in-kind redemptions for spot Bitcoin, Ethereum ETFs

The SEC has approved in-kind redemptions for Bitcoin and Ethereum ETFs, signaling a shift in the market.

SEC approves innovative in-kind redemptions for Bitcoin and Ethereum ETFs

On July 29, the U.S. Securities and Exchange Commission (SEC) granted approval for in-kind creations and redemptions for spot Bitcoin and Ethereum exchange-traded products (ETPs). This move will allow authorized participants, typically large institutions, to directly exchange shares of these ETPs for the underlying cryptocurrencies instead of cash. SEC Chair Paul Atkins described this development as a 'new day' for the agency, emphasizing that it aims to enhance the efficiency and reduce costs associated with these financial products. While retail investors will not see immediate benefits, institutional investors will now have more operational flexibility. The agency also significantly increased the options limit for BlackRock's iShares Bitcoin Trust ETF from 25,000 to 250,000, which is expected to attract larger institutional investments and provide better management during market volatility. Meanwhile, Ethereum ETFs have been gaining traction, with a notable rise in market share despite recent challenges faced by Bitcoin ETFs.

Key Takeaways

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SEC approved in-kind redemptions for Bitcoin and Ethereum ETFs.

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This move enhances tax efficiency and cuts operational costs for institutional investors.

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Retail investors will not see immediate benefits from this change.

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The options limit for BlackRock's Bitcoin ETF was increased significantly.

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Ethereum ETFs are experiencing a rise in market share amid growing interest.

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The approval reflects a growing acceptance of cryptocurrency by traditional finance.

"Investors will benefit from these approvals, as they will make these products less costly and more efficient."

This quote from SEC Chair Paul Atkins highlights the expected advantages of the new regulations.

"And now the limit has just been raised 10x. This will help bring in bigger institutions and be helpful during volatility. Pretty big."

Eric Balchunas comments on the significance of the increased options limit for BlackRock's ETF.

"ETF issuers have sought it since the products were approved last year."

SEC Commissioner Hester Pierce emphasizes the long-awaited nature of this regulatory approval.

This decision by the SEC marks a pivotal moment for the cryptocurrency market. By approving in-kind redemptions, the agency not only addresses operational inefficiencies in ETPs but also signals a growing acceptance of cryptocurrency within traditional finance. Institutional investors, who are the primary beneficiaries of these changes, could see a more structured path to engagement with cryptocurrencies. However, the lingering gap between institutional and retail investor benefits remains an important concern. As the market evolves, it will be crucial for regulators to consider how these advancements can be extended to smaller investors, ensuring a balanced playing field in a landscape that is rapidly changing.

Highlights

This move signals a shift in how we view crypto investing.
In-kind redemptions could democratize access to cryptocurrencies.
SEC's decision is a game changer for institutional engagement.
Ethereum ETFs gain momentum as Bitcoin loses ground.

Institutional investors may dominate benefits from new SEC rules

The SEC's approval of in-kind redemptions primarily favors institutional investors, potentially sidelining retail investors. Observers speculate on the long-term implications for market accessibility and fairness.

The unfolding developments in crypto ETFs may reshape investor landscapes significantly.

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cryptocurrency bitcoin ethereum SEC ETFs finance cryptocurrency regulation

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