In-Kind ETFs Approved for Bitcoin and Ethereum by SEC

Key Points

• In-Kind ETFs Approved for Bitcoin and Ethereum by SEC
• New fast-track approval path set for future altcoin ETFs
• 10x increase in IBIT options limit boosts ETF market
• Regulatory changes mark a major crypto mainstream shift

The U.S. Securities and Exchange Commission (SEC) has officially approved in-kind ETFs for Bitcoin and Ethereum, signaling a new era for crypto investing in the U.S. financial markets.

This isn’t just another routine ETF approval; it’s a foundational shift in how investors can gain crypto exposure.

Unlike traditional crypto ETFs, which require issuers to purchase the assets themselves (cash-creation model), in-kind ETFs allow investors to exchange actual crypto tokens for ETF shares directly with licensed issuers. The same applies in reverse for redemptions.

I’m pleased to share the SEC approved in-kind creations and redemptions for crypto ETPs. The approvals continue to build a rational regulatory framework for crypto, leading to a deeper and more dynamic market, which will benefit all American investors. https://t.co/UbQ9pXlBpD pic.twitter.com/DX8ub16Ey3

— Paul Atkins (@SECPaulSAtkins) July 29, 2025

What does this mean in practice?

Investors can now swap their Bitcoin or Ethereum directly for ETF shares, reducing steps and costs. This mirrors how commodity-based ETFs like gold and silver work. It also aligns crypto ETFs more closely with traditional asset classes, boosting legitimacy in the eyes of institutional investors.

SEC Chairman Paul Atkins highlighted the move as “a significant step toward regulatory parity for digital assets,” signaling that crypto may finally be treated like the commodities they’re often compared to.

Few things on this:
1. This is just for APs (big inst who do cr/rd), doesn’t mean retail can exchange IBIT for actual bitcoin (altho an ETF may launch soon that does that a la $OUNZ)
2. It’s not huge impact to retail but more of a plumbing fix. It just makes the pipes a little…

— Eric Balchunas (@EricBalchunas) July 29, 2025

The change also lowers legal and operational barriers, making it easier for both issuers and investors to interact with ETFs in the crypto space. And the industry is already celebrating—BlackRock and Fidelity, among others, expressed strong support for the new structure.

This shift could even influence trends like Bitcoin dominance, which has been a strong indicator of upcoming altcoin cycles.

In-kind creation / redemption has been approved for both spot Bitcoin and spot Ethereum ETFs. The coming approvals for alt coin ETFs likely going to allow in-kind from the get go. More movement in right direction IMO https://t.co/grWhH8IK4B

— James Seyffart (@JSeyff) July 29, 2025

Fast-Track Approvals and 10x Options Limits Signal ETF Boom

The SEC’s decision came with two more updates that show regulators are actively trying to speed up crypto adoption:

I welcome in-kind creations and redemptions for crypto-asset ETPs, a feature that ETP sponsors and investors have wanted since the initial approvals of crypto-asset ETPs: https://t.co/eBbrbC8b0H

— Hester Peirce (@HesterPeirce) July 29, 2025

1. Accelerated approval for altcoin ETFs

While only Bitcoin and Ethereum in-kind ETFs were approved for now, the SEC mentioned that a fast-track approval system is in place for altcoin ETFs. This means that future products tied to popular assets like Solana (SOL) or Avalanche (AVAX) could hit the market much faster.

Looks like SEC just approved in-kind creation / redemption for all spot bitcoin and ether ETFs. pic.twitter.com/P8SEJv2Tk8

— Eric Balchunas (@EricBalchunas) July 29, 2025

This could significantly reduce the red tape that has historically delayed crypto ETF rollouts. It also indicates that the SEC is now more open to approving a diverse range of crypto investment products, not just the top two assets.

Tokens like PancakeSwap (CAKE) could potentially benefit from this pipeline, especially if they continue to show strong on-chain activity and demand.

2. IBIT ETF options limit increased 10x

The SEC also increased the position limit on IBIT options tenfold. This creates space for more complex trading strategies and higher-volume institutional participation. Options give investors a way to bet on future price movements or hedge existing positions, essential tools in mature markets.

In-kind creation / redemption has been approved for both spot Bitcoin and spot Ethereum ETFs. The coming approvals for alt coin ETFs likely going to allow in-kind from the get go. More movement in right direction IMO https://t.co/grWhH8IK4B

— James Seyffart (@JSeyff) July 29, 2025

More options volume means more liquidity, which in turn lowers spreads and attracts more market participants. ETF providers like BlackRock are already planning new strategies around these expanded limits, including options-based Bitcoin ETFs designed for active traders.

All signs point to a rapidly evolving crypto ETF landscape. One that’s becoming more flexible, accessible, and mainstream.

How In-Kind ETFs Could Impact Crypto Prices and Adoption

Beyond the regulatory and technical details, the bigger story here is how these changes could affect the broader crypto market.

Lower trading costs = more volume:

Because in-kind ETFs cut out extra steps (like forcing issuers to purchase crypto themselves), trading becomes cheaper. Lower costs could drive more frequent ETF activity, which in turn could boost underlying demand for Bitcoin and Ethereum.

Reduced barriers for institutions:

Many institutional investors have been waiting on the sidelines due to compliance issues or regulatory uncertainty. In-kind models mirror existing commodity ETFs, making them a comfortable entry point for large funds, pensions, and asset managers.

Increased crypto adoption via traditional finance:

With crypto ETFs now easier to trade and more cost-effective, retail investors gain exposure to crypto markets through platforms they already use, like Fidelity, Charles Schwab, or Robinhood.

An issuer just wrote me: “This is huge.. and will create explosion of option based bitcoin ETFs.” https://t.co/z3UtoGucgd

— Eric Balchunas (@EricBalchunas) July 29, 2025

This creates a gateway to mass adoption, where users may invest in crypto assets without needing to open wallets, manage private keys, or use exchanges.

Boost to altcoin markets ahead:

The SEC’s fast-track plan for altcoin ETFs is a green light for the next wave of adoption. If Ethereum and Bitcoin ETFs succeed under this model, investors and issuers will likely push for similar products tied to other major blockchains.

We’re already seeing strong interest in tokens with real momentum. Just this month, Vine Token surged over 400% as altcoin sentiment heated up. This is exactly the kind of environment that could feed future ETF approvals.

Meanwhile, Ethereum’s NFT-based assets like CryptoPunks continue to hold cultural and financial significance

potentially serving as underlying assets in the next wave of tokenized financial products.

And as regulation tightens in other areas, like the controversial Tornado Cash trialt, his ETF liberalization stands out as a more investor-friendly move.

Analysts already predict that ETF-driven demand could add billions in liquidity to the crypto market in the next year alone.