The U.S. Securities and Exchange Commission (SEC) approved an order that will permit in-kind creations and redemptions for crypto asset exchange-traded product (ETP) shares.
The approval represents a departure from recently approved spot bitcoin and ether ETPs, which were limited to creations and redemptions on an in-cash basis. Now, with this new approval, bitcoin and ether ETPs, consistent with other commodity-based ETPs approved by the SEC, will be permitted to create and redeem shares on an in-kind basis.
“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,” SEC Chairman Paul 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. Today’s approvals continue to build a rational regulatory framework for crypto, leading to a deeper and more dynamic market, which will benefit all American investors. This decision aligns with the standard practices for similar ETPs.”
The SEC also voted to approve other orders that advance a merit-neutral approach to crypto-based products. These orders include 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.
Further, the commission issued two scheduling orders soliciting comments in support of, or in opposition to, the Division of Trading and Market’s approval of a national securities exchange’s proposals to list and trade two large cap crypto-based ETPs.
“The Commission’s decision today is an important development for the growing marketplace for crypto-based ETPs. In-kind creation and redemption provide flexibility and cost savings to ETP issuers, authorized participants, and investors, resulting in a more efficient market,” Jamie Selway, director of the Division of Trading and Markets, said.