The US stock and values commission. UU. (SEC) has approved the use of processes of creation and redemption in kind for all funds (ETF) quoted by Bitcoin (BTC) and Ethereum (ETH), marking a significant change in the regulator approach to digital assets under their new leadership.
The decision allows authorized participants, large institutional investors to facilitate the liquidity of the ETF, create and exchange ETF actions directly in BTC or ETH, instead of having to use cash. The mechanism is considered widely more efficient and safe, since it allows authorized participants to track the demand for investors and adjust the offer of ETF shares in real time, without the need to convert assets from one side to another in fiduciary currency.
This marks the first important cryptographic policy movement of the SEC since Paul Atkins was appointed president of the agency earlier this year. Atkins, a former SEC Commissioner known for his friendly opinions for the market, has long advocated a more open regulatory approach to digital assets.
“” It’s a new day at the SEC, “Atkins said in a press release.” A key priority of my presidency is to develop a regulatory framework for the purpose for cryptographic asset markets, “he continued.” I am happy that the Commission has approved these orders that allow creations in kind and the redidal representations for a cripity host ETP. Investors will benefit from these approvals, since they will make these products less expensive and more efficient. “
The change occurs after Blackrock submitted a request in January to allow transactions in kind for its Ishares Bitcoin Trust (Ibit), and other emitters, including Fidelity and Ark Invest, followed it quickly.
Until now, all Bitcoin Spot ETF approved, first in green by the SEC in January 2024, were only allowed to operate with cash creations and reimbursements. This requirement added operational complexity and was widely seen as a barrier to efficiency for institutional market manufacturers.
The SEC also approved an increase in the position limits for the options of options in Ibit, a movement that will allow operators to maintain larger options linked to the fund.
The position limits are regulatory limits that restrict the number of options contracts that a merchant or institution can control in a single security to avoid market handling or excessive risk. When raising these limits, the SEC is pointing out greater comfort with the liquidity and maturity of the Bitcoin ETF market, and provides institutional investors more flexibility to collect or express opinions on the performance of the fund.
The changes could significantly increase institutional participation in both ETF groups by reducing friction for arbitration and coverage strategies.
The DEC decision underlines a growing disposition under the leadership of Atkins to treat cryptographic assets within the same regulatory frameworks applied to traditional markets.
