US SEC green lights in-kind creations and redemptions for Bitcoin and Ethereum ETPs
|- US SEC approves on Tuesday the in-kind creations and redemptions for crypto asset ETPs.
- The move aligns crypto ETPs with traditional commodity-based ETPs, such as Gold and Oil, thereby enhancing cost-efficiency and operational efficiency.
- SEC Chair Paul S. Atkins called this a milestone in developing a fit-for-purpose regulatory framework for crypto assets.
The US Securities and Exchange Commission (SEC) announced on Tuesday that it has approved orders to permit in-kind creations and redemptions by authorized participants for crypto asset exchange-traded product (ETP) shares. The move marks a regulatory shift from the previous cash-only mechanism used for spot Bitcoin (BTC) and Ethereum (ETH) ETPs and now aligns crypto products with traditional commodity-based ETPs like Gold and Oil.
Regulatory clarity for crypto markets
The US SEC announced in its press release on Tuesday that it has voted to approve orders to permit in-kind creations and redemptions by authorized participants for crypto ETP shares.
This order is a departure from the previous cash-only mechanism used for spot BTC and ETH ETPs, which were limited to creations and redemptions on an in-cash basis. This new development allows investors to receive the underlying asset, which is considered more efficient, as it enables the fund’s authorized participants to avoid selling the assets on the market, potentially reducing transaction costs. Moreover, it aligns crypto ETPs with traditional commodity-based ETPs, such as Gold and Oil.
SEC Chair Paul S. Atkins said, “I am pleased the Commission approved these orders permitting in-kind creations and redemptions for a host of crypto asset ETPs. Investors will benefit from these approvals, as they will make these products less costly and more efficient.”
Apart from this development, the Commission also voted to approve other orders that advance a merit-neutral approach to crypto-based products, including exchange applications seeking to list and trade an ETP that would hold mixed spot Bitcoin and spot Ether, options on certain spot Bitcoin ETPs, Flexible Exchange (FLEX) options on shares of certain BTC-based ETPs, and an increase of position limits up to the generic limits for options (up to 250,000 contracts) for listed options on certain BTC ETPs.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.