The U.S. Securities and Exchange Commission (SEC) has decided to permit in-kind redemptions for exchange-traded funds (ETFs) for Bitcoin and Ethereum. This change marks a significant shift in the approach to cryptocurrency-based ETFs.
SEC's New Decision
The SEC voted to allow in-kind redemptions for Bitcoin (BTC) and Ethereum (ETH) ETFs. This means that it is now possible to create and redeem shares of spot-based cryptocurrency ETFs using actual underlying assets instead of just cash.
Benefits of In-Kind Redemptions
The crypto industry has been actively advocating for the implementation of in-kind redemptions, as this will enhance operational efficiency and lower costs. Previously, crypto ETFs were only able to handle cash-based transactions, which limited their flexibility.
Reactions to SEC's Decision
SEC Chair Paul Atkins stated that this decision "continues to build a rational regulatory framework for crypto, leading to a deeper and more dynamic market." Commissioner Hester Peirce also welcomed the changes, suggesting that in-kind redemptions are what ETF sponsors and investors have wanted since the initial approvals of crypto-asset ETFs.
The SEC's new decision to allow in-kind redemptions for Bitcoin and Ethereum ETFs is seen as a step towards improved regulation in the crypto industry and the potential growth of its efficiency.
