The U.S. Securities and Exchange Commission (SEC) recently decided to allow cryptocurrency ETF issuers to directly exchange fund shares for Bitcoin and Ethereum, which analysts view as a structural enhancement rather than a revolution for retail investors.
Bloomberg's Eric Balchunas referred to this change as a "pipeline fix" and pointed out that it would not significantly affect the interaction between ordinary investors and cryptocurrency ETFs. "This does not mean retail investors can exchange IBIT for actual Bitcoin," he wrote on the X platform, "but it indicates that the SEC is ready to consider cryptocurrencies as a legitimate asset class."
The new rules announced on Tuesday allow asset management companies to directly exchange cryptocurrency tokens for ETF shares without using cash. This practice, known as physical creation and redemption, reduces conversion costs, enhances price accuracy, and makes ETFs more efficient, ultimately benefiting investors by lowering costs and narrowing spreads.
On Thursday, Bitwise Asset Management announced that its Bitcoin and Ethereum ETFs will be the first to adopt the physical creation and redemption method, becoming the first cryptocurrency funds in the U.S. to implement this SEC policy.
"This will only improve the operating process," Balchunas stated, as former SEC Chairman Gary Gensler opposed physical creation due to concerns over the potential lack of clarity regarding the source of funds.
This move brings cryptocurrency ETFs closer to traditional trading products, making them more cost-effective and operationally simple. Bitwise President Teddy Fusaro noted that this ruling aligns cryptocurrency funds with the "same infrastructure" used by institutions and ETFs.
"This lays the foundation for a deeper integration of digital assets with the traditional financial system," Federico Brokate, head of 21Shares U.S. operations, told Cointelegraph.
U.S. Bitcoin ETFs currently hold over 6% of the total supply.
As U.S. Bitcoin ETFs rapidly increase their Bitcoin holdings, the SEC's ruling and Bitwise's actions come at an opportune time.
According to Bitbo data, the current 12 U.S. Bitcoin ETFs hold 1,299,401 BTC, accounting for 6.18% of the total 21 million coins.
Among them, BlackRock's iShares Bitcoin Trust leads, holding 740,601 BTC, worth $8.766 billion.
Secondly, the Fidelity Wise Origin Bitcoin Fund holds 205,864.2 BTC, worth approximately $2.437 billion. The Bitwise Bitcoin ETF holds 40,638.7 BTC, approximately $4.81 billion.
