Yesterday the US Securities and Exchange Commission (SEC) voted to allow in kind creations and redemptions of crypto asset exchange traded product (ETP) shares. Since the approval of the first spot Bitcoin ETFs in January 2024, all crypto ETFs have been settled in cash. The SEC portrayed the move as providing efficiencies and cost savings for the ETF issuers. That’s because ETF issuers can receive crypto directly rather than purchasing it on the open market. A side effect is that banks will engage far more with cryptocurrencies.
“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, adding that the change will make ETPs less costly and more efficient. “Today’s approvals continue to build a rational regulatory framework for crypto, leading to a deeper and more dynamic market, which will benefit all American investors. This decision aligns with the standard practices for similar ETPs.”
According to the ETF Database, US crypto ETFs have around $183 billion in assets under management, with BlackRock’s $87 billion iShares Bitcoin Trust (iBIT) as the market leader. Onboarding to ETFs is via authorized participants. For iBIT, seven of the dozen authorized participants are linked to banks. They include ABN AMRO, BMO, Bank of America, Citigroup, Goldman Sachs, JP Morgan and UBS.
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