The SEC now permits in-kind creations and redemptions for U.S. spot crypto ETFs. Pair that with Bitnomial's in-kind crypto margin deposits and crypto settlement for perpetuals, futures, and options, and the result is a true bridge between listed futures and ETF primary flows. Traders can source or deliver the underlying in kind, lock spreads to NAV with physical futures, and cut conversion and timing frictions that cash creations force market makers to absorb.
What In-Kind Really Changes
In a standard ETF primary market, APs create or redeem shares directly with the fund in large blocks. With in-kind, APs can deliver or receive the underlying asset itself instead of cash. In equities and commodities this is how costs stay outside the fund and how price tracks NAV. Extending that same mechanism to Bitcoin and Ethereum ETFs aligns crypto with the established ETF model and reduces the forced conversions that add slippage and tax friction.
The SEC’s July 29, 2025 action explicitly opens the door to in-kind flows for U.S. spot Bitcoin and Ether products, bringing them closer to traditional commodity ETF plumbing. At the same time, the SEC has adopted new listing standards that require a crypto asset to have at least six months of futures trading on a U.S. Designated Contract Market like Bitnomial Exchange before an ETF tied to that asset can be listed. This ties the growth of ETFs directly to the health and maturity of regulated U.S. futures markets.
Where Physical Futures Fit In
Bitnomial's Exchange and Clearinghouse support physically settled, or crypto-settled futures and options with in-kind crypto margin collateral deposits. Long futures positions can take delivery of actual crypto assets at expiry, and shorts can make delivery. Because Bitnomial accepts digital assets as margin and supports crypto settlement, traders can keep exposure in-kind from start to finish, without having to convert in and out of fiat. This creates the connective tissue between futures and ETF in-kind baskets.
Pricing Reality: NAV, iNAV, and Executable Spot
ETF shares use a daily official value (NAV) and an intraday estimate (iNAV). But crypto trades nonstop across many venues, so the ETF's reference values and the real market price can diverge throughout the day. Creation and redemption arbitrage exists to close that gap, but the costs and frictions fall on APs and market makers, not the fund. Under cash-only flows, those APs are forced to turn cash into crypto or back at prevailing market prices. Under in-kind, they can deliver or receive BTC and ETH directly and avoid those conversions and respective costs.
The Edge: Pair In-Kind Flows With Physical Futures
Premium creation
If the ETF trades at a premium to the spot market during the day, traders can buy BTC via spot or go long Bitnomial physical futures to secure deliverable crypto, create in kind at NAV, and sell ETF shares to capture the premium minus costs. Using physical futures is more capital efficient than buying spot since they are leveraged and backed by crypto margin, allowing positions to be forward-locked without tying up the full notional value.
Discount redemption
If the ETF trades at a discount to the underlying, holders can redeem in kind, receive BTC or ETH, and sell the coins into the market, or hedge with Bitnomial physical futures to lock the value during processing. Futures again provide a capital-efficient tool because positions are leveraged, reducing the amount of collateral required compared to selling or borrowing spot inventory outright.
Intraday NAV lock with deliverable futures
Because official NAV is an end-of-day measure, traders can use physically settled futures during the day to lock in the price of the crypto they’ll need for an in-kind creation or redemption. This clarifies their economics upfront and protects them from intraday price swings. Futures allow this hedge to be executed on leveraged, minimizing capital tied up while still ensuring deliverability into the ETF basket.
Lower Cost of Capital With Futures
Executing ETF arbitrage through spot alone is costly. Spot borrowing and crypto loans are not widely available, and where they exist the financing rates are high. Physical crypto futures at Bitnomial provide a leveraged way to acquire the underlying with crypto margin deposits, lowering the cost of capital to run creation and redemption strategies. This makes the physical-futures-to-ETF trade structurally more efficient than the spot-to-ETF trade.
Why Cash-Only Flows Are Costly for Market Makers
When creations and redemptions are cash-only, the AP bears the trading and conversion costs to turn cash into BTC or ETH or vice versa. Those costs often show up as wider spreads and less aggressive arbitrage, leaving more persistent premiums and discounts for end investors. In the ETF model, APs typically pay the trading costs associated with primary flows, which is why in-kind is the preferred mechanism for tight tracking.
The New Workflow: End-to-End In Kind
With in-kind ETF capability on one side and Bitnomial's crypto-native futures clearing on the other, traders can keep inventory in crypto the whole way: 1. Post BTC or ETH as margin at Bitnomial Exchange 2. Use physically settled futures to source or schedule deliverable coins via EFPs 3. Create or redeem ETF shares in kind to capture premium or discount 4. Keep the collateral and settlement in crypto throughout, avoiding repeated fiat conversions
This reduces operational float, trims conversion slippage, and removes timing gaps between EOD NAV and live markets that cash flows struggle to bridge.
Practical Considerations and Risks
Creation unit sizes, fees, and basket policies vary by issuer and exchange. There is basis risk between futures and spot, and index methodologies can differ from where execution occurs. Risk, margin, and custody policies still matter. But the big change is structural: in-kind is now permitted, and deliverable futures with crypto collateral give traders tools to express and hedge those flows efficiently inside a CFTC-regulated framework.
Bottom Line
In-kind ETF mechanics combind with Bitnomial's crypto-settled futures and crypto-native clearing creates a two-way bridge between listed futures and ETF primary markets. That bridge improves tracking, lowers friction, reduces capital costs, and turns intraday NAV deviations into tradable opportunities, while keeping collateral and settlement in the same asset from start to finish. And with the SEC's new rule requiring six months of DCM-listed futures before a crypto ETF can launch, exchanges like Bitnomial Exchange are more than participants in this ecosystem, they're a prerequisite.