- SEC approves in-kind creation and redemption for spot Bitcoin and Ethereum ETFs.
- Position limits for Bitcoin ETF options raised to 250,000 contracts to boost liquidity.
- FLEX options introduced, allowing customizable Bitcoin ETF derivatives trading terms.
The U.S. Securities and Exchange Commission (SEC) has officially approved “in-kind” creation and redemption for spot Bitcoin and Ethereum ETFs.
The order, dated July 29, marks a major operational upgrade for the massive and rapidly growing crypto ETP market.
What does “in-kind” redemption mean for investors?
This regulatory adjustment now allows market participants to exchange actual Bitcoin or Ether directly for ETF shares, and vice-versa.
The change, which brings crypto ETFs in line with the standard for all other commodity-based funds, is expected to simplify operations, reduce trading costs, and significantly increase tax efficiency for holders.
Related: BlackRock Files for In-Kind ETH ETF Redemptions, Adds $18.9 Million in Ethereum
Which major ETFs are included in the approval?
The SEC’s order approved requests from all major U.S. exchanges, including Nasdaq, NYSE Arca, and Cboe BZX. This means the new in-kind model will now apply to the spot crypto ETFs managed by giants like BlackRock, Ark21, Fidelity, VanEck, and Franklin Templeton.
In a public statement, SEC Chairman Paul S. Atkins confirmed the decision, noting that it “enables investors to benefit from lower costs and more efficient fund operations.”
What else did the SEC approve for Bitcoin ETFs?
In a separate but related decision, the SEC also approved a massive upgrade for the Bitcoin ETF options market.
The agency raised the position limit for these options by a factor of ten, from 25,000 to 250,000 contracts, a move designed to boost liquidity and allow for much larger institutional participation. The approval also introduced customizable “FLEX options.”
This dual-barreled approval is seen as a major bullish catalyst for the market. The move to in-kind redemptions is expected to unlock a new wave of capital and efficiency for the already massive $150 billion ETF market.
Related: SEC Review Underway for Cboe’s In-Kind Crypto ETF Filings
Combined with the expanded options market, the decisions pave the way for more sophisticated institutional strategies, potentially fueling the next major leg of the bull run.
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