The U.S. Securities and Exchange Commission approves in-kind redemptions for spot ETFs of Bitcoin and Ethereum.
The U.S. Securities and Exchange Commission (SEC) has officially approved the creation and redemption of exchange-traded products (ETPs) for 'physical' cryptocurrency assets.
This decision aims to eliminate the cost and market distortions that cryptocurrency trading platforms have experienced due to the fact that they, until now, only allowed cash transactions.
The U.S. Securities and Exchange Commission (SEC) stated in an official announcement today that previously approved spot cryptocurrency exchange-traded funds only allowed cash redemptions, leading to significant flaws. Under this model, authorized participants could only redeem shares of the ETFs in U.S. dollars, forcing issuers to buy and sell cryptocurrencies in the market. The SEC indicated that this led to increased transaction costs and caused price slippage, making the ETFs more expensive for investors.
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Under the new decision, cryptocurrency trading platforms will be able to create and redeem their cryptocurrency assets directly, just like traditional commodity trading platforms. This will make transactions more transparent and less costly. The SEC has stated that this regulation is an important step for investor protection, market efficiency, and fair competition.
The statement included thanks from SEC Chairman Paul S. Atkins, Commissioner Hester M. Peirce, and the cryptocurrency team for their leadership, noting that the decision was a long-awaited development in the cryptocurrency asset market.
*This is not investment advice
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