The U.S. Securities and Exchange Commission (SEC) has approved allowing the creation and redemption of shares in exchange-traded cryptocurrency funds in a physical manner, which is 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 rather than only cash, as was the case before.
According to the authority, this measure will allow authorized participants to use core digital assets such as Bitcoin (BTC) and Ethereum (ETH) instead of cash when creating or redeeming shares of the funds.
This change is expected to help reduce trading costs and narrow spreads, enhancing market efficiency and increasing the accuracy of price tracking compared to the actual asset.
Paul Atkins, Chairman of the SEC, expressed his welcome for this step, confirming that it makes these investment products more efficient and less costly for investors.
Meanwhile, Jimmy Silway, Head of Trading and Markets, pointed out that the decision provides greater flexibility for participants and enhances the maturity of the market for exchange-traded funds based on cryptocurrencies.
For his part, analyst Eric Balchunas considered that this decision represents 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 waiting for the authority's approval on another important step regarding the mechanisms for custody and storage of these assets, a step that experts, such as Nite 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 products related to digital currencies.
It is noteworthy that Ethereum instant funds have recorded continuous positive inflows for 18 consecutive days, with total new investments reaching approximately $5.4 billion.
