SEC's In-Kind Approval Paves Way for More Efficient Crypto ETFs

The US Securities and Exchange Commission (SEC) made a significant change in the structure of crypto asset exchange-traded products (ETPs) by permitting in-kind creations and redemptions. This shift, which took effect on July 29, 2025, allows authorized participants to deliver a basket of cryptocurrency to a trust in exchange for ETF shares.

Previously, the SEC required cash-only transactions for spot Bitcoin and ether ETPs, forcing issuers to buy or sell assets on the open market to meet redemption needs. This resulted in higher transaction costs for investors. The new in-kind model brings crypto products closer to the structure of commodity ETFs like gold.

SEC Chairman Paul S. Atkins described the change as part of building a 'fit-for-purpose regulatory framework' for crypto asset markets. The decision is expected to provide flexibility and cost savings to issuers, authorized participants, and investors.