All Spot Bitcoin, Ethereum ETFs Cleared for In-Kind Redemptions by SEC

SEC Greenlights In-Kind Creations for Spot Bitcoin and Ethereum ETFs in Landmark Policy Shift

The U.S. Securities and Exchange Commission (SEC) has approved in-kind creation and redemption processes for all spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs), marking a major step toward integrating digital assets into traditional financial infrastructure.

The approval allows authorized participants—typically large institutional trading firms—to exchange ETF shares directly for BTC or ETH, eliminating the need to transact in cash. Market participants widely view this mechanism as more efficient and cost-effective, particularly for arbitrage and hedging strategies.

This decision represents the SEC’s most significant pro-crypto move under Chair Paul Atkins, who assumed leadership earlier this year. Known for his market-friendly regulatory stance, Atkins has consistently pushed for a more pragmatic and innovation-focused framework for digital assets.

“It’s a new day at the SEC,” Atkins stated in an official release. “My chairmanship is focused on delivering a fit-for-purpose regulatory structure for crypto markets. These in-kind approvals will make digital asset ETFs more efficient and accessible for investors.”

The policy change follows a request from BlackRock in January seeking in-kind permissions for its iShares Bitcoin Trust (IBIT). Other ETF issuers—including Fidelity and Ark Invest—submitted similar applications shortly after.

Until now, all spot Bitcoin ETFs, first approved by the SEC in January 2024, were required to operate under cash-only creation and redemption rules. That structure added operational friction for institutional market makers and was widely viewed as a barrier to full market efficiency.

Alongside the in-kind update, the SEC also raised position limits for options trading on IBIT. The change will allow institutions to hold larger derivatives positions tied to the ETF, expanding flexibility for hedging and speculative strategies.

These limits serve as safeguards to prevent excessive risk and potential manipulation. The SEC’s move to raise them reflects growing confidence in the liquidity, scale, and structural maturity of the Bitcoin ETF market.

Together, the approvals are expected to unlock deeper institutional participation and signal a broader willingness by the SEC—under Atkins’ leadership—to treat crypto assets with the same regulatory tools applied to traditional capital markets.