The U.S. Securities and Exchange Commission (SEC) has officially approved the creation and redemption of crypto-asset exchange-traded products (ETPs) “in-kind.”
This decision aims to end the cost and market imbalances that crypto ETPs have experienced due to the fact that, until now, they have only allowed cash-based transactions.
The SEC, in an official statement released today, stated that previously approved spot crypto ETPs only allowed cash-based redemptions, creating serious drawbacks. Under this model, authorized participants could only redeem ETP shares in US dollars, forcing issuers to buy and sell crypto assets on the market. The SEC noted that this increased transaction costs, created price slippage, and made ETPs more expensive for investors.
With the new ruling, crypto ETPs will now be able to create and redeem crypto assets directly, just like traditional commodity ETPs. This will make transaction processes both more transparent and less costly. The SEC stated that this regulation is an important step for investor protection, market efficiency, and fair competition.
The statement thanked SEC Chairman Paul S. Atkins, Commissioner Hester M. Peirce, and the Crypto Task Force for their leadership, and stated that the decision was a long-awaited development in the crypto asset market.
*This is not investment advice.
