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Bitcoin Price Reclaims $118,000 As SEC Approves In-Kind Creations and Redemptions for Crypto ETPs

Bitcoin Magazine

Bitcoin Price Reclaims $118,000 As SEC Approves In-Kind Creations and Redemptions for Crypto ETPs

The SEC announced Tuesday that it has approved orders permitting in-kind creations and redemptions for crypto asset exchange-traded products (ETPs), a move that could dramatically improve the efficiency of Bitcoin and crypto ETFs while potentially reducing costs for investors.

The decision represents a departure from the cash-only creation and redemption mechanism required for the initial wave of spot Bitcoin ETFs approved in January last year. Under the new framework, authorized participants will be able to exchange ETF shares directly for the underlying crypto assets, similar to how traditional commodity ETFs operate.

The bitcoin price responded positively to the news, climbing back above $118,000 after briefly dipping below $117,000 yesterday.

“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,” said SEC Chairman Paul S. Atkins.

“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.”

The announcement comes amid surging institutional interest in Bitcoin ETFs, with BlackRock’s IBIT and Fidelity’s FBTC having already accumulated over 400,000 BTC since the launch of these ETFs last year. The total assets under management across all spot Bitcoin ETFs now exceed $50 billion.

This is a game-changing development for the Bitcoin ETP market. In-kind creations and redemptions will likely reduce tracking error, lower costs, and make these products more attractive to institutional investors who prefer the operational efficiency of physical settlement.

The regulatory shift arrives as corporate adoption of Bitcoin continues to accelerate. This week alone, Strategy bought $2.5 billion of Bitcoin, while MARA Holdings completed a $950 million convertible note offering primarily earmarked for BTC purchases. Japanese tech firm Metaplanet also added 780 BTC worth $92.5 million to its treasury.

The SEC’s orders also approved several other crypto market developments, including:

  • Exchange applications for mixed spot Bitcoin and Ethereum ETPs
  • Options trading on certain spot Bitcoin ETPs
  • Flexible Exchange (FLEX) options on shares of certwain BTC-based ETPs
  • Increased position limits up to 250,000 contracts for listed options on certain Bitcoin ETPs

Market participants expect the changes to attract additional institutional capital to Bitcoin markets. The ability to create and redeem shares in-kind reduces various risks and costs associated with cash transactions, potentially making these products more appealing to sophisticated investors.

The bitcoin price responded positively to the news, climbing back above $118,000 after briefly dipping below $117,000 yesterday. The total Bitcoin and crypto market capitalisation has rebounded above $4 trillion, supported by growing institutional involvement and improving regulatory clarity.

At press time, bitcoin price trades at $118,086, as markets digest both the SEC’s announcement and the latest wave of corporate adoption news. With improved operational efficiency for ETFs and continued institutional buying, analysts suggest the regulatory developments could help support sustained price appreciation.

This post Bitcoin Price Reclaims $118,000 As SEC Approves In-Kind Creations and Redemptions for Crypto ETPs first appeared on Bitcoin Magazine and is written by Vivek Sen.


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