The U.S. Securities and Exchange Commission (SEC) has approved a major policy change that could significantly boost investment in cryptocurrencies. The decision allows in-kind creation and redemption mechanisms for spot crypto exchange-traded products (ETPs), a move that industry leaders say will reduce costs, improve efficiency, and better align crypto ETFs with traditional investment products.
What Is In-Kind Creation and Why It Matters
Traditionally, ETF shares are created or redeemed using cash. With the new in-kind process, ETF issuers can now exchange ETF shares directly for underlying crypto assets like bitcoin and ethereum. This structure has long been used in traditional asset ETFs and is considered more tax-efficient and cost-effective.
Asset management firm Bitwise—which manages the Bitwise Bitcoin ETF (BITB) and Bitwise Ethereum ETF (ETHW)—hailed the decision as a landmark moment for the industry. In a post on social media, Bitwise said:
> “It’s big news—and a long time coming. This approval brings spot crypto ETPs closer in line with traditional-asset ETPs, which have used in-kind transactions for decades.
Impact on Crypto Investment Landscape
The SEC approved this change on July 29, with the goal of making crypto ETPs more competitive and accessible. SEC Chairman Paul S. Atkins stated:
> “It’s a new day at the SEC. A key priority of my chairmanship is to develop a fit-for-purpose regulatory framework for crypto markets. These approvals will lower costs and increase efficiency for investors.”
According to Bitwise, this shift:
Reduces trading costs for ETF participants
Improves tax efficiency
Enhances operational transparency
Signals regulatory confidence in crypto infrastructure
Industry Reaction and Broader Implications
The crypto industry has been pushing for this change for years. Bitwise concluded:
> “This is another milestone in a big year for crypto. It brings digital assets further into the mainstream financial system.”
Experts believe that this development will encourage more institutional involvement,
