SEC Greenlights In-Kind Transactions for Crypto Exchange-Traded Products

The U.S. Securities and Exchange Commission (SEC) announced on Tuesday that “authorized participants” (APs) for crypto exchange-traded products (ETPs) can now execute in-kind transactions, in line with all other commodity-based ETPs. APs are financial institutions that create and redeem ETP shares based on market demand. The creation and redemption processes are most efficient and cost-effective when APs such as Goldman Sachs, UBS, Citi, and Citadel can directly exchange underlying crypto assets for ETP shares from issuers such as Blackrock or Grayscale, without having to first liquidate those assets into cash. “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 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.”