SEC approves in-kind redemptions for Bitcoin and Ethereum ETFs, easing tax burdens, and updates ETP rules with options and position limit expansions.
Spot Ethereum and Bitcoin ETFs can now perform in-kind redemptions for their clients, as per a recent statement released by the United States Securities and Exchange Commission. This action signifies a departure from the previous requirement, which only restricted these transactions to currency.
New SEC Regulation Places Bitcoin ETFs on the Same Standards as Gold ETPs
Following the SEC’s official press release, authorized participants can generate and redeem ETP shares directly with genuine Bitcoin or Ethereum. The SEC declared that this modification aligns Ethereum and Bitcoin ETPs with the current regulations for commodity-based ETPs, including those backed by gold.
In an X post, SEC Chairman Paul S. Atkins stated that the orders indicate an endeavor to establish a regulatory framework for crypto asset markets. He asserted that the new process will enhance efficiency and reduce costs for market participants and investors.
In the press release, the approval of in-kind procedures for Ethereum and Bitcoin ETFs provides operational flexibility and cost savings, according to Jamie Selway, Director of the Division of Trading and Markets. He characterized the decision as a positive development for the crypto ETP marketplace. The US Securities and Exchange Commission approved Nasdaq’s application for staking capabilities in BlackRock’s spot Ethereum ETF.
SEC Extends Crypto ETP Regulations to Include Dual Asset Approvals, Position Limits, and Options
The SEC also voted on other related orders in addition to the approval of in-kind redemptions. These encompassed approvals for FLEX options on shares of Bitcoin-based ETPs and specific spot Bitcoin ETFs.
The position limits for Bitcoin ETF options were modified with the approval of the US regulator. This equates to a tenfold increase from 25,000 contracts to 250,000 contracts. These modifications will significantly increase the derivatives market for Bitcoin ETPs.
In an X post, Bloomberg analyst Eric Balchunas emphasized the significance. He quoted an issuer who stated, “This is unprecedented…” and will result in a proliferation of Bitcoin ETFs based on options.
These revisions are effective immediately, as indicated in the press release. Following President Trump’s signing of the GENIUS Act, the SEC’s ruling is a further commitment to its recent dynamic perspective on digital assets. Additionally, the new development facilitates crypto integration into regulated markets and ensures it is consistent with current ETP practices.
In a post on X, Bloomberg analyst James Seyffart stated that in-kind provisions will likely be included in forthcoming approvals for altcoin ETFs from the outset. Seyffart characterized the change as “further progress in the appropriate direction.”
Nate Geraci, President of The ETF Store, concurrently underscored the SEC’s forward-thinking approach. He also cited the SEC Chairman, who stated, “It is a new day at the SEC, and a key priority of my chairmanship is the development of a regulatory framework appropriate for the needs of crypto asset markets.”