This week, the U.S. Securities and Exchange Commission (SEC) approved in-kind creations and redemptions for crypto ETFs based on actual assets. This decision is expected to be a significant improvement for crypto investors.
What are in-kind redemptions and creations?
In-kind creation and redemption means that shares of exchange-traded products are created and destroyed using actual assets like Bitcoin and Ether instead of cash. This method helps eliminate trading fees from buying and selling crypto on exchanges and reduces bid-ask spreads, leading to a more efficient process and improved price tracking.
Expert Opinions on the SEC's New Decision
SEC Chairman Paul Atkins expressed satisfaction with the approval allowing in-kind creations and redemptions for crypto ETPs, stating that 'investors will benefit from these approvals as they will make these products less costly and more efficient.' Jamie Selway, Director of the Division of Trading and Markets, emphasized the importance of this decision for the growing marketplace for crypto-based ETPs. ETF expert Eric Balchunas noted that it is more of a 'plumbing fix' than a huge impact on retail investors.
Other SEC Approvals in Crypto ETFs
The SEC also approved several other crypto-related products, including ETFs holding mixed Bitcoin and Ether. According to experts, spot Ether ETFs are currently seeing their 18th consecutive day of inflows, totaling $5.4 billion in new capital. The next potential move for the SEC could be the approval of staking for crypto ETFs.
The approval of in-kind creations and redemptions will significantly change the crypto ETF market, easing access and making trading more beneficial for investors. This development sets the stage for the next steps, such as the implementation of staking.
