- SEC may approve in-kind BTC ETF creations allowing sponsors to transfer bitcoin instead of converting coins into cash.
- Commissioner Peirce confirms multiple Form 19b-4 filings from Nasdaq and BlackRock seeking SEC approval for in-kind creation redemptions.
The U.S. Securities and Exchange Commission may soon let bitcoin ETFs use “in-kind” processes for creations and redemptions. Firms such as BlackRock have urged the agency to permit transfers of actual bitcoin rather than relying on cash flows.
That change would let ETF sponsors hand over bitcoin directly when investors enter or exit, instead of selling coins on the spot market and passing along the proceeds. Republican Commissioner Hester Peirce addressed the topic on Wednesday at a Bitcoin Policy Institute panel. She said the SEC has received multiple Form 19b-4 filings—starting with Nasdaq on behalf of BlackRock—and that those requests “are going through the process now.”
Peirce added, “I think that’s something that’s on the horizon at some point. I can’t prejudge, but we hear that there’s a lot of interest.” Her comment suggests the agency may shift away from the cash model it favored when spot bitcoin ETFs won approval over a year ago. Under that approach, sponsors must move coins out of custody, sell them immediately and return cash to investors.
Advocates say an in-kind mechanism would cut trading costs and reduce market impact. Bloomberg Intelligence analyst James Seyffart noted in January that funds could then trade more smoothly and face fewer slippages. Furthermore, sponsors would avoid the need to liquidate large bitcoin blocks in volatile conditions.
Since the Trump administration, the SEC has shown more openness toward crypto products than it did under the previous leadership. As a result, firms have filed for ETFs tracking other tokens—XRP, SOL and DOGE among them. Bloomberg’s Seyffart and senior ETF analyst Eric Balchunas now assign a better than 90 percent chance that most spot crypto ETF filings will win approval.
If the SEC adopts in-kind redemptions, ETF structures would align more closely with those in traditional markets. Investors could receive or deposit the underlying asset directly. Meanwhile, sponsors would maintain tighter custody controls. Such a shift promises greater efficiency for large institutional flows and could attract fresh capital.
Taken together, these moves point to an ETF market that may soon handle bitcoin much like other commodities. Clarity on in-kind processes—once approved—would mark a clear step toward deeper integration of digital assets with mainstream finance.
