The Securities and Exchange Commission voted on July 29 to allow authorized participants to create and redeem shares of bitcoin and ether ETPs on an in-kind basis, according to a press release. The move replaces the previous cash-only process and aligns these crypto products with the treatment of other commodity-based ETPs.
Previously approved spot bitcoin and ether ETPs required participants to transact exclusively in cash, a structure that limited operational efficiency. Under the new orders, issuers can deliver or receive the underlying crypto assets directly, reducing transaction costs, narrowing bid-ask spreads and improving overall market liquidity.
In a broader move to support crypto-based investment products, the SEC also approved applications to list and trade an ETP holding both spot BTC and spot ETH, options and FLEX options on certain spot bitcoin ETPs, and increased position limits for those options up to the generic cap of 250,000 contracts.
These approvals mark a significant step toward a more mature and efficient U.S. crypto ETP market, enabling issuers and participants to leverage in-kind mechanisms that have long been standard in traditional commodity ETFs.
The SEC’s move comes after multiple record weeks of crypto ETP inflows and a surge in the number of public companies holding over 1,000 BTC.
