SEC Chairman Paul Atkins described this move as the beginning of a new era for crypto markets. According to Atkins, the change will lower costs and bring greater efficiency for ETF issuers and investors alike. 

Previously, only cash-based transactions were allowed. Now, authorized participants can use digital assets directly when creating or redeeming ETF shares. This shift reduces pressure on the market and allows for smoother, more cost-effective operations. 

What Does the New System Offer? Greater Efficiency in Crypto ETFs 

Jamie Selway, Director of the SEC’s Division of Trading and Markets, said the in-kind mechanism provides flexibility and cost advantages for fund issuers. Additionally, funds can now operate without having to sell crypto assets, which helps minimize tax burdens. 

To recall, the SEC approved spot Bitcoin and Ether ETFs back in 2024, but limited them to cash-based processes. Since then, the crypto industry has consistently called for in-kind options. 

Just last month, SEC Commissioner Hester Peirce acknowledged the demand during her speech at the Bitcoin Policy Institute conference. In short, this regulatory move marks a long-anticipated shift within the crypto sector. 

Meanwhile, recent developments in Congress have also accelerated this transition. Lawmakers passed three major crypto-related bills addressing market structure, stablecoin regulations, and opposition to a surveillance-driven central bank digital currency (CBDC). These legislative changes align with the Trump administration’s pro-crypto stance. 

Growing Demand for Bitcoin and Ethereum ETFs 

U.S. spot Bitcoin ETFs have recorded over $6.6 billion in inflows across the last 12 trading days. According to Bitbo data, these funds now hold approximately 1.298 million BTC — valued at around $152.1 billion. 

On the Ethereum side, BlackRock’s iShares Ethereum ETF has gained attention for its rapid growth. The fund surpassed $10 billion in assets in just 251 days, becoming the third-fastest ETF to reach that milestone. 

In summary, with SEC approval of in-kind transactions, crypto ETFs enter a new chapter. This rule not only boosts efficiency but also supports broader regulatory reform across the digital asset landscape.

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The Event Was Called “Historic,” But Fell Short of Expectations

Some investors described the summit as a historic milestone for Bitcoin and the cryptocurrency industry, while others found it disappointing. Popular crypto trader Miles Deutscher called the event a “massive net positive” for Bitcoin. Kyle Samani, managing partner at Multicoin Capital and an attendee at the summit, described it as a “historic moment” for the industry.

However, Coin Bureau founder and CEO Nic Puckrin commented after the summit:

“Just looking at the charts, I can assume that nothing groundbreaking came from the White House summit?”

Bitcoin maximalist Justin Bechler harshly criticized the event, writing:

“The White House ‘crypto summit’ is a gathering of rent-seeking lobbyists pushing state-approved surveillance tokens.”

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Trump Administration Marks a Shift in Crypto Policy!

The Trump administration’s White House Crypto Summit signaled a sharp departure from previous administrations’ stance on the crypto industry. The event followed President Donald Trump’s executive order to establish a Bitcoin strategic reserve.

Following the White House Crypto Summit and the executive order on the Bitcoin strategic reserve, Bitcoin’s price dropped approximately 7.3%. Traders interpreted the move as a typical “sell-the-news” event. President Trump’s executive order authorized the U.S. government to acquire additional BTC only through asset forfeiture and budget-neutral strategies that do not create additional debt or taxpayer burden. This condition disappointed some Bitcoin maximalists, who had hoped for direct BTC purchases by the U.S. government.

ETF Outflows and Price Projections

After the summit, Bitcoin ETFs saw $370 million in outflows, with traders describing the executive order as underwhelming. Many analysts now predict Bitcoin could drop to $70,000 in March before attempting a rally toward $100,000. The recent executive order and subsequent market reaction sparked debates on whether Bitcoin has already peaked in this cycle or if new all-time highs await in 2025.

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Some market analysts, however, believe this move could be bullish for Bitcoin in the long run. Here are four reasons why experts see this decision as a positive signal:

1. The Risk of a Bitcoin Ban Decreases

Bitwise Chief Investment Officer Matt Hougan stated that the creation of a U.S. Strategic Bitcoin Reserve significantly reduces the likelihood that the government will ever ban Bitcoin. Previously, the Federal Reserve Bank of Minneapolis suggested that Bitcoin could force the federal government to balance its budget, which could lead to regulatory restrictions. However, this scenario now seems far less likely.

2. Other Countries May Follow the U.S.’s Lead

The U.S. government’s move may encourage other nations to establish their own Bitcoin reserves. According to BitBO data, the U.S. currently holds 207,189 BTC, making it the largest state-held Bitcoin reserve. China follows with 194,000 BTC, while the United Kingdom holds 61,000 BTC. El Salvador, the only country that has made Bitcoin legal tender, has accumulated 6,103 BTC so far. Coinbase CEO Brian Armstrong suggested that this decision could influence G20 nations to adopt similar strategies.

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3. Bitcoin Becomes More Legitimate for Institutional Investors

The establishment of a U.S. Bitcoin reserve makes it more difficult for institutions like the International Monetary Fund (IMF) to label Bitcoin as dangerous or inappropriate for holding. The IMF has previously opposed Bitcoin investments by sovereign nations, pressuring El Salvador to halt its Bitcoin accumulation in exchange for a $1.4 billion financial aid package. However, the U.S. backing Bitcoin could weaken the IMF’s stance and encourage institutional adoption.

4. Fears of a U.S. Bitcoin Sell-Off Diminish

Bitwise Head of Research Ryan Rasmussen outlined key takeaways from the U.S. Bitcoin Reserve announcement:

• Other countries are now more likely to accumulate Bitcoin.
• Institutional investors have no excuse to avoid Bitcoin.
• The fear of a U.S. Bitcoin sell-off is now gone.
• The likelihood of state governments buying Bitcoin has increased.
• The probability of the U.S. government banning Bitcoin is now effectively zero.

Crypto lawyer John Deaton pointed out that Treasury Secretary Scott Bessent and Secretary of Commerce Howard Lutnick have been instructed to find “budget-neutral” ways to acquire more Bitcoin. ETF Store President Nate Geraci added, “Two years ago, people would have laughed at the idea of the U.S. government creating a Bitcoin reserve.”

Despite an initial drop, Bitcoin (BTC) quickly rebounded and reached $88,200 at the time of writing.

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