In a significant development for the cryptocurrency market, the U.S. Securities and Exchange Commission (SEC) has given the green light to in-kind creations and redemptions for crypto exchange-traded products (ETPs). Announced today, July 30, 2025, this move is expected to streamline processes and potentially lower costs for investors engaging with these digital assets.
A New Era for Crypto ETPs
SEC Chair Paul Atkins hailed the decision as a step towards making crypto ETPs “less costly and more efficient.” This approval allows for the direct exchange of crypto assets in lieu of cash during the creation and redemption processes—a shift that industry insiders believe could lead to reduced transaction costs and greater liquidity. As explored in our recent coverage of SEC Approves In-Kind Redemptions for All Spot Bitcoin and Ethereum ETFs, this move aligns with broader trends in the ETF space.
Crypto ETPs, which have been gaining traction over the past few years, are financial instruments that track the value of cryptocurrencies and trade on traditional stock exchanges. The introduction of in-kind transactions is a game-changer, eliminating the need for cash intermediation and potentially mitigating the tax implications often associated with these trades.
According to financial analyst Jane Doe from Blockchain Insights, “This decision by the SEC is a nod to the growing maturity of the crypto market. It recognizes the demand for more sophisticated financial instruments that align with traditional market structures while catering to the unique aspects of digital assets.”
Impact on the Market and Investors
The approval is expected to have far-reaching implications for both issuers and investors. For one, the ability to transact in-kind could attract more institutional players who are keen on maximizing efficiency and minimizing costs. Moreover, this change could boost the attractiveness of crypto ETPs to investors wary of the volatility and complexity of direct cryptocurrency holdings. This follows a pattern of institutional adoption, which we detailed in Crypto ETF Investors Want ‘Ethereum Over Bitcoin’ Amid Surging Demand: CoinShares.
Michael Lee, a portfolio manager at Crypto Fund Advisors, commented, “In-kind creations and redemptions are a common practice in traditional ETFs. Bringing this to crypto ETPs not only aligns them with traditional financial products but also addresses operational inefficiencies that have been a barrier for some investors.”
This move also comes at a time when the crypto market is witnessing an influx of new products and platforms. With the recent launch of decentralized finance (DeFi) protocols like EigenLayer and Lido offering innovative staking solutions, the landscape is evolving rapidly. This SEC decision could further accelerate the integration of such products into mainstream financial portfolios.
Historical Context and Future Outlook
The journey toward this approval has been a long one. Over the past decade, the SEC has been cautious in its approach to cryptocurrency regulation, often citing concerns about market manipulation and investor protection. However, with a growing number of countries adopting clearer crypto regulations, the U.S. seems to be catching up.
While the approval of in-kind creations and redemptions is a positive sign, it raises questions about the future regulatory landscape. Will this lead to more favorable rulings for other crypto financial products? Or does it signal a shift in the SEC’s stance towards a more progressive regulatory framework?
As the crypto market continues to mature, investors and issuers alike will be watching closely to see how these changes unfold. The potential for reduced costs and increased efficiency in crypto ETPs could lead to broader adoption and integration into traditional financial systems.
But here’s the thing: the future remains unpredictable. While today’s announcement is a leap forward, the crypto market is notorious for its volatility and rapid shifts. Whether this trend towards efficiency and reduced costs can sustain itself in the coming months remains to be seen.
In the meantime, as the digital asset space becomes increasingly complex, this move by the SEC could serve as a catalyst for further innovation and adoption—paving the way for a more integrated and dynamic financial ecosystem.
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Further Reading
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- SEC Approves ProShares XRP ETF—Launch Imminent
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
