The US Securities and Exchange Commission (SEC) approved the use of in-kind creation and redemption mechanisms for cryptocurrency exchange-traded product (ETP) shares on July 29. 1 This move aligns crypto-based ETPs with long-established practices for traditional commodity and equity ETPs.

What Are Crypto ETPs?

ETPs are investment vehicles that track the performance of an underlying asset or index, and are traded on public exchanges. 2 In the context of digital assets, ETPs allow investors to gain exposure to cryptocurrencies such as Bitcoin or Ethereum in a more secure, regulated and brokerage-compatible format — without public investors needing to buy, custody or manage the cryptoassets directly.

Creation and Redemption Mechanisms: In-Kind vs. Cash

One important feature of ET

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