U.S. SEC Eases Rules for Bitcoin, Ether Funds in Shift From Cash-Only Model

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The U.S. Securities and Exchange Commission on Mondayapproved new rules allowing authorized participants to create and redeem sharesof crypto exchange-traded products (ETPs) using in-kind transfers of bitcoinand ether. The decision departs from the cash-onlyrequirement imposed on recently approved spot crypto funds and aligns cryptoETPs with other commodity-based products.Bitcoin and Ether ETPsWith the change, issuers of bitcoin and ether ETPs cannow manage share flows using the underlying digital assets directly, astructure that could lower operational costs and improve efficiency.The policy update comes months after the SEC approveda wave of spot bitcoin and ether ETFs, all of which were restricted to usingcash for creations and redemptions. Monday’s decision extends the operationalmodel used in traditional commodity funds—such as those backed by gold oroil—to crypto products."It’s a new day at the SEC, and a key priority of mychairmanship is developing a fit-for-purpose regulatory framework for cryptoasset markets," said SEC Chairman Paul Atkins. "I am pleased the Commission approved these orderspermitting in-kind creations and redemptions for a host of crypto asset ETPs.Investors will benefit from these approvals, as they will make these productsless costly and more efficient."In addition to permitting in-kind transactions, theSEC approved other changes supporting the expansion of the crypto ETPecosystem. These include allowing a mixed ETP that holds bothspot bitcoin and ether, authorizing options and FLEX options on certain bitcoinETPs, and raising the position limits on listed bitcoin options to 250,000contracts—the same threshold used for other high-volume options.Comments on Exchange ProposalsThe commission also issued two scheduling orders tosolicit public comments on exchange proposals seeking to list two large-capcrypto-based ETPs. These measures continue the agency’s stated aim to apply a“merit-neutral” approach when reviewing crypto-linked products.The changes signal a broader shift in regulatoryposture toward digital assets and suggest increased openness to treating cryptoproducts on par with traditional financial instruments.This article was written by Jared Kirui at www.financemagnates.com.