Analysts believe the recent SEC decision to allow Crypto ETF issuers to directly exchange fund shares with Crypto ETF assets is more of a structural improvement rather than a major shift for retail investors.
Eric Baltunas from Bloomberg referred to this change as a “piping fix,” emphasizing that it still doesn’t allow everyday investors to swap IBIT for actual Bitcoin. “It’s a bit strange how regular investors engage with crypto exchanges and the funds they trade,” he noted on X.
The update announced on Tuesday permits asset managers to exchange Crypto tokens directly for ETF shares, eliminating the need for cash transactions. This method, known as in-kind creation and redemption, cuts down conversion fees, enhances price accuracy, increases ETF efficiency, and ultimately lowers costs for investors.
Major institutions in the Crypto ETF space are already adapting to this new structure. For example, Bitwise Asset Management recently stated that its Bitcoin (BTC) and Ether (ETH) ETFs will begin offering in-kind creation and redemption services, making it the first US crypto fund to implement this change following the SEC ruling on July 29th.
Bulknath remarked that the situation is “just a little better in the pipe,” though he noted that former SEC chairman Gary Gensler had reservations about in-kind creations due to concerns over the legitimacy of some funds.
This development is expected to align Crypto ETFs more closely with traditional products, providing a cleaner and more cost-effective operational framework. Bitwise President Teddy Fusalo indicated that this aligns cryptocurrency funds with institutional and ETF standards.
Federico Brokate, US Business Director at 21Shares, mentioned that “this move lays the foundation for deeper integration between digital assets and traditional financial systems.”
US Bitcoin ETFs Hold Over 6% of Total Supply
As US Bitcoin ETFs expand their Bitcoin holdings rapidly, the SEC’s guidance and Bitwise’s advancements are noteworthy.
According to Bitbo data, 12 US Bitcoin ETFs currently own 1,299,401 BTC, which accounts for 6.18% of the total 21 million Bitcoin supply.
BlackRock’s Bitcoin ETF Ishares Bitcoin Trust leads the pack with 740,601 BTC valued at approximately $87.67 billion.
In second place is the Origin Bitcoin fund, holding 205,864.2 BTC with a value of around $24.37 billion. The Bitwise Bitcoin ETF has 40,638.7 BTC worth $4.81 billion.
