SEC approves new standards for crypto ETPs, allowing in-kind redemptions and broadening eligibility.
- SEC introduces new crypto ETP standards including in-kind redemptions.
- Coins with futures on Coinbase eligible after 6 months.
- Expected increase in crypto liquidity and reduced transaction costs.
On July 29, 2025, the U.S. SEC approved new standards for crypto ETPs, allowing in-kind transactions and expanding coin eligibility for exchanges like Coinbase.
The SEC’s move aims to reduce costs and improve market efficiency, potentially attracting more institutional investment and reshaping crypto ETP frameworks.
SEC Permits In-Kind Redemptions for Spot Crypto ETPs
The SEC’s decision marks a notable shift in crypto regulation by allowing in-kind redemptions for spot crypto ETPs. This move aligns the sector more closely with traditional commodities. Notably, coins with six months of futures on Coinbase gain broader eligibility.
SEC Permits Kind Creations of Redemptions for Crypto ETPsKey figures such as Paul S. Atkins and Mark Uyeda led the SEC in implementing these updates. Uyeda criticized prior cash-only redemptions for causing unnecessary costs, now eliminated under the new standards. This change opens the market to several large-cap tokens.
“Investors will benefit from these approvals, as they will make these products less costly and more efficient.” — Paul S. Atkins, SEC Chairman
Institutional Demand Expected to Surge with New Guidelines
The financial sector anticipates a rise in institutional participation due to reduced costs and increased operational efficiency. Expected effects include greater liquidity and minimized price slippage, especially in BTC and ETH ETPs, enhancing market access.
Market reactions underline the reform’s potential in lowering hedging costs. Hester M. Peirce supports these, emphasizing the better market parity achieved. This innovation is seen as leveling the playing field for crypto products.
Eric Balchunas, Senior ETF Analyst, Bloomberg, mentions:
https://www.coindesk.com/markets/2025/07/29/sec-approves-in-kind-redemptions-for-all-spot-bitcoin-ethereum-etfsRevamped ETP Standards Follow Commodity Market Practices
Past SEC-regulation required a cash-only approach, seen as less efficient. This revision follows commodity markets’ move to in-kind transactions, which historically improved liquidity. The precedent suggests increased investor participation and market expansion.
Analysts forecast further integration of crypto in mainstream finance, reflecting similar past events in commodity trading. Expert commentary indicates enhanced liquidity and transparency, echoing the broader market shifts witnessed in established ETP markets.
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