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SEC’s ETF Shift Could Send Crypto Flows Into Overdrive
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Aug 02, 2025
Crypto ETFs have taken a massive leap forward as the SEC's approval of in-kind mechanisms slashes costs, boosts efficiency, and propels digital assets deeper into mainstream finance.
Bitwise Hails SEC Approval of In-Kind Mechanism as Pivotal for Crypto ETFs
Asset management firm Bitwise explained on July 30 via social media platform X why the U.S. Securities and Exchange Commission (SEC)’s approval of in-kind creation and redemption mechanisms for spot crypto exchange-traded products (ETPs) is a landmark development for the digital asset industry.
“It’s big news—and a long time coming,” Bitwise stated. The new structure applies to the Bitwise Bitcoin ETF (BITB), the Bitwise Ethereum ETF (ETHW), and several other similar products.
The change allows ETF shares to be exchanged for underlying assets—such as bitcoin and ethereum—rather than cash. Bitwise explained: “In-kind creation and redemption is a process where ETF shares are exchanged for the underlying assets—like bitcoin—instead of cash, helping reduce costs and improve tax efficiency.” The firm called the SEC decision a “mainstream signal,” saying it:
Brings spot crypto ETPs closer in line with traditional-asset ETPs and ETFs, which have done in-kind transactions for decades.
On July 29, the SEC approved in-kind creation and redemption for crypto asset ETPs, aligning them with other commodity-based ETPs. The decision aims to lower costs and increase efficiency. SEC Chairman Paul S. Atkins commented: “It’s a new day at the SEC, and a key priority of my chairmanship is developing a fit-for-purpose regulatory framework for crypto asset markets. 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.”
Bitwise emphasized that the approval reflects years of industry effort to enhance investor access to crypto in the most operationally effective way:
For years, we, our partners, and others in the industry have been pushing for this change to bring investors the most efficient means of accessing crypto possible.
The company concluded its remarks by characterizing the event as part of a broader trend: “Another milestone in a big year for this space.” Advocates say that such infrastructure improvements will help integrate crypto further into mainstream investment channels.
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