The US Securities and Exchange Commission’s recent decision to let crypto ETF issuers swap Bitcoin and Ether directly for fund shares represents a structural upgrade, not a retail revolution, analysts say.
Bloomberg’s Eric Balchunas called the change “a plumbing fix,” noting it won’t meaningfully affect how everyday investors interact with crypto exchange traded funds. “This doesn’t mean retail can exchange IBIT for actual bitcoin,” he wrote on X, “but it shows the SEC is ready to treat crypto like a legit asset class.”
The change, announced Tuesday, allows asset managers to exchange crypto tokens directly for ETF shares, instead of using cash. Known as in-kind creations and redemptions, the move cuts out conversion fees, improves price accuracy and makes the ETFs more efficient, ultimately benefiting investors through lower costs and tighter spreads.
Large institutions behind crypto ETFs are already adopting the new structure. On Thursday, Bitwise Asset Management announced that its Bitcoin (BTC) and Ether (ETH) ETFs will begin offering in-kind creations and redemptions, becoming the first US crypto funds to implement the structure following the SEC’s July 29 ruling.
“It just makes the pipes a little better,” Balchunas wrote, adding that former SEC Chair Gary Gensler was against in-kind creations due to concerns over potential funds “sourced from bad places.”
The move brings crypto ETFs closer in line with traditional exchange-traded products, making them more cost-efficient and operationally cleaner. According to Bitwise President Teddy Fusaro, the ruling brings crypto funds on “the same foundation” used for institutions and ETFs.
“This move lays the groundwork for deeper integration between digital assets and the traditional financial system,” Federico Brokate, head of US Business at 21Shares told Cointelegraph.
Related: SEC approves in-kind creations and redemptions for crypto ETPs
US Bitcoin ETFs now hold over 6% of the total supply
The SEC ruling and move from Bitwise come as US Bitcoin ETFs continue to accumulate Bitcoin rapidly.
According to data from Bitbo, the 12 US Bitcoin ETFs currently hold 1,299,401 BTC, representing 6.18% of the total 21 million coins supply.
iShares Bitcoin Trust, the Bitcoin ETF from BlackRock, is leading the way with 740,601 BTC valued at $87.66 billion.
In second place is the Fidelity Wise Origin Bitcoin Fund, holding 205,864.2 BTC valued at around $24.37 billion. The Bitwise Bitcoin ETF holds 40,638.7 BTC, worth $4.81 billion.
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