Key Takeaways
Ah, the U.S. SEC, that venerable bastion of financial prudence, has bestowed upon us the delightful gift of in-kind redemptions for crypto ETFs, promising to enhance tax efficiency and trim those pesky operating costs. But alas, dear reader, only the institutional elite shall bask in this newfound glory for the time being. 🏦
On the 29th of July, the SEC, in a moment of uncharacteristic generosity, granted permission for in-kind creations and redemptions for spot crypto ETPs (exchange-traded products). How thrilling! 🎉
Now, our esteemed authorized participants (APs)—those grand institutions—will have the privilege of exchanging shares of the ETPs for the underlying crypto assets, rather than the mundane cash. How positively revolutionary! 💰
What changes and what doesn’t
In a statement that could only be described as a masterclass in bureaucratic optimism, SEC chair Paul Atkins proclaimed this a ‘new day’ at the agency, suggesting it would enhance the cost and efficiency of the ETPs. One can only hope he was not referring to the weather. ☀️
“Investors will benefit from these approvals, as they will make these products less costly and more efficient.”
Why in-kind method matter
This splendid change will apply to all current spot Bitcoin [BTC] and Ethereum [ETH] ETFs, along with other approved crypto ETFs. A veritable cornucopia of options! 🍇
According to Bloomberg’s Senior ETF Analyst, the ever-astute Eric Balchunas, while this unlocks operational advantages, it remains a backend change that will not directly tickle the fancy of retail users—at least, not yet. How tragic! 😢
Retail investors, alas, cannot redeem BlackRock’s IBIT for physical BTC, though Balchunas tantalizingly hinted that ETFs with such a feature may be on the horizon. A glimmer of hope! 🌅
SEC Commissioner Hester Pierce, in a rare moment of enthusiasm, welcomed the in-kind basis, noting that ETF issuers have long sought this boon since the products were approved last year. How quaint! 🥳
The agency also approved a tenfold increase in the options limit on BlackRock’s iShares Bitcoin Trust ETF, soaring from 25K to a staggering 250K. One can only imagine the jubilation in the hallowed halls of finance! 🎈
Balchunas remarked that this increase was ‘pretty big,’ as IBIT was already among the most active in ETF options before this grand elevation. How delightful for those who thrive on volatility! 📈
“And now the limit has just been raised 10x. This will help bring in bigger institutions and be helpful during volatility. Pretty big.”
Is ETH catching up?
However, it appears that the spot BTC ETFs have been rather sluggish in comparison to their ETH counterparts, suffering a staggering 80% drop in inflows just last week. How embarrassing! 😬
Indeed, ETH ETFs have seen their market share swell to a respectable 13%, while BTC ETFs have plummeted from a lofty 90% to a mere 82% in the past two months. The winds of change are blowing, dear reader! 🌬️
Yet, Balchunas predicts that the growth of ETH ETFs’ market share may stall at 20%. A classic case of ‘what goes up must come down,’ it seems! 🎢
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2025-07-30 16:18