The approval coincides with rising institutional interest and bipartisan efforts to formalize crypto market rules
The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption for cryptocurrency exchange-traded products (ETPs), allowing authorized participants to exchange ETF shares directly for the underlying crypto assets rather than cash.
In a statement on Tuesday, the SEC’s Commissioner Mark T. Uyeda said the change allows spot Bitcoin and Ether exchange-traded funds to “use the same processes for creations and redemptions as other comparable products”.
Previously, issuers were required to redeem shares in cash, which often introduced inefficiencies, tax burdens, and price slippage for investors.
“The Commission’s order eliminates the market asymmetries and inefficiencies created by cash-only redemption,” Uyeda noted.
He added that the updated model enables crypto-asset ETFs to manage exposure “more cheaply, more transparently, and with better alignment to how asset managers and investors use ETPs in other markets”.
The decision was applauded on X by SEC Chair Paul Atkins and came alongside additional regulatory steps, including approvals for mixed Bitcoin-Ether ETPs, options on spot Bitcoin ETFs, and raised position limits on derivatives tied to these products.
I'm pleased to share the SEC approved in-kind creations and redemptions for crypto ETPs. The approvals continue to build a rational regulatory framework for crypto, leading to a deeper and more dynamic market, which will benefit all American investors. https://t.co/UbQ9pXlBpD pic.twitter.com/DX8ub16Ey3
— Paul Atkins (@SECPaulSAtkins) July 29, 2025
The SEC also opened comment periods on proposals to list two large-cap crypto ETPs, signaling broader momentum toward crypto market integration.
Regulatory momentum builds as SEC shifts stance on crypto ETFs
The approval of in-kind redemptions reverses the SEC’s 2024 approach, which limited crypto ETFs to cash transactions despite similar products in commodities using in-kind methods.
Commissioner Hester Peirce and others had pushed for the change at the 2025 Bitcoin Policy Summit, citing inefficiencies in the cash-only structure.
Commissioner Mark T. Uyeda also underscored that the new order aligns with the SEC’s mandate to protect investors and promote market fairness.
“In-kind redemptions will enable crypto-asset ETPs to access the tools for managing exposure more cheaply, more transparently,” Uyeda said, calling the update long overdue.
Industry participants had argued that denying in-kind flexibility put crypto ETFs at a disadvantage and increased operational costs.
Crypto ETF market growth accelerates alongside policy reforms
Since the launch of spot Bitcoin ETFs in January 2024, the crypto ETF market has grown rapidly. U.S. Bitcoin ETFs now hold over 1.29 million BTC, valued at more than $152 billion, according to Bitbo.
Ether ETFs are also gaining momentum, with BlackRock’s iShares Ethereum ETF surpassing $10 billion in assets in just 251 days.
The SEC’s latest rule change comes amid a broader policy shift under the Trump administration. Congress recently passed several crypto-focused bills aimed at regulating market structure, stablecoins, and preventing a surveillance-based digital dollar.
