Bitwise Asset Management, a global crypto asset manager with over $10 billion in client assets, has announced that its Bitwise Bitcoin ETF (NYSE: BITB) and Bitwise Ethereum ETF (NYSE: ETHW) now support in-kind creation and redemption of shares by authorized participants. This change follows recent approval from the U.S. Securities and Exchange Commission (SEC) and is expected to enhance trading efficiencies, potentially lowering costs for investors in Bitwise’s spot crypto ETPs.
Previously, new shares of U.S. spot crypto ETPs could only be created or redeemed when authorized participants (APs) exchanged U.S. dollars for fund shares. With the regulatory approval, APs can now deliver or receive bitcoin or ether directly in exchange for shares. This operational shift could lead to tighter bid-ask spreads and may reduce tax exposure for these funds.
Matt Hougan, Chief Investment Officer at Bitwise, stated, “Part of the genius of ETFs and ETPs historically is how they’ve incentivized APs to help funds trade more efficiently, but for the past several years, the cash-only mechanism meant crypto ETPs couldn’t achieve the efficiency that traditional-asset products enjoy.” He added that “In-kind creation is one of the final structural pieces that spot crypto ETPs need to reach their full potential as a mainstream investment. With this approval, crypto ETPs can unlock new tax efficiencies, tighter spreads, and new cost savings. That’s great news for investors.”
Bitwise’s ETPs currently feature competitive management fees, high trading volumes, and tight bid/ask spreads, which in-kind functionality could further optimize. It is important to note that this approval applies specifically to authorized participants, and individual investors in BITB and ETHW will not see direct changes in how they access the funds.
Teddy Fusaro, President at Bitwise, commented on the significance of the approval, remarking, “This is more than an operational milestone; it is a breakthrough for crypto’s role in the global financial system.” He further elaborated, “In-kind creation is how the most trusted ETFs and ETPs in the world are built. With this approval, crypto ETPs move onto that same foundation, bringing them in line with the design that institutions trust most. It’s one more sign that crypto is becoming a lasting part of modern portfolios.”
Founded in 2017, Bitwise offers a range of professional investment products, including ETPs, private funds, multi-strategy solutions, separately managed account strategies, and staking. The firm employs over 100 technology and investment professionals and serves investment professionals and financial institutions seeking exposure to bitcoin and other crypto assets.
