The U.S. Securities and Exchange Commission (SEC) has approved allowing the creation and redemption of shares of exchange-traded funds for instant cryptocurrencies in a physical manner, marking an important shift from the previous model that was limited to cash transactions only.
This means that in the case of creating or redeeming shares from crypto ETF funds, they can be collected in digital currencies as an option, not just cash as was previously the case.
According to the authority, this measure will allow authorized participants to use underlying digital assets such as Bitcoin (BTC) and Ethereum (ETH) instead of cash when creating or redeeming shares of the funds.
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This change is expected to contribute to reducing trading costs and narrowing spreads, enhancing market efficiency and increasing price tracking accuracy compared to the actual asset.
Paul Atkins, Chairman of the SEC, welcomed this step, confirming that it makes these investment products more efficient and less costly for investors.
Meanwhile, Jamie Silway, Director of Trading and Markets, noted that the decision provides greater flexibility for participants and enhances the maturity of the exchange-traded funds based on cryptocurrencies.
Analyst Eric Balchunas considered this decision to be a limited technical improvement for individual investors, but it contributes to establishing a more efficient infrastructure for the funds.
It is worth noting that the market is still awaiting the authority's approval of another important step related to the custody and storage mechanisms for these assets, a step that experts like Nit Geraci see as potentially next on the authority's agenda.
The authority recently approved a number of other products, including index funds that combine Bitcoin and Ethereum, in addition to flexible options on these funds, reflecting a gradual expansion in the authority's acceptance of digital currency-related products.
It is noted that Ethereum instant funds recorded continuous positive inflows for 18 consecutive days, with new investments totaling approximately $5.4 billion.
