US SEC Approves In-Kind Creations and Redemptions for Crypto ETPs, Expanding Operational Flexibility for Digital Asset Markets
On 29 July 2025, the United States Securities and Exchange Commission (US SEC) published in Release No. 2025-101, titled “SEC Permits In-Kind Creations and Redemptions for Crypto ETPs,” thereby permitting in-kind creations and redemptions by authorised participants for crypto asset exchange-traded product (ETP) shares. The decision marks a shift from the cash-only model applied to recently approved spot Bitcoin and Ether ETPs, bringing them into alignment with operational norms for other commodity-based ETPs. The in-kind process allows ETP shares to be created or redeemed directly with the underlying crypto assets, reducing transaction costs and improving efficiency for issuers, authorised participants, and investors. The Commission also advanced complementary measures supporting a merit-neutral approach to crypto-based financial products, expanding trading options and listing flexibility across multiple asset classes.
- This policy change authorises Bitcoin ETPs and Ether ETPs to use in-kind creation and redemption, replacing the previous cash-only requirement.
- It is Expected to lower product costs, improve operational efficiency, and enhance market liquidity.
- Regulatory alignment: Brings crypto ETP operations in line with standard practices for commodity-based ETPs under US SEC oversight.
- Additional approvals:
- Listing and trading approval for an ETP holding mixed spot Bitcoin and Ether.
- Authorisation for listed options on certain spot Bitcoin ETPs.
- FLEX options permitted on shares of certain BTC-based ETPs.
- Position limits for listed options on BTC ETPs increased to 250,000 contracts.
- Public consultation: Scheduling orders issued inviting comments on two proposals to list and trade large-cap crypto-based ETPs under delegated authority.
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US SEC Evaluates Nasdaq’s Proposal to Enable Ethereum Staking for iShares Ethereum Trust: Key Insights
On 29 July 2025, the United States Securities and Exchange Commission (US SEC) issued Release No. 34-103561; File No. SR-NASDAQ-2025-053, announcing its review of a Nasdaq Stock Market LLC proposal to amend the iShares Ethereum Trust. Sponsored by iShares Delaware Trust Sponsor LLC, a subsidiary of BlackRock, the amendment seeks to allow the Trust to stake its Ethereum holdings. The ether is held with Coinbase Custody Trust Company, with Coinbase, Inc. as execution agent and The Bank of New York Mellon as cash custodian and administrator. The proposed rule change would remove the current prohibition on staking and authorise the Sponsor to stake assets to enhance network security and capture economic value for shareholders. The US SEC’s notice invites public comment to assess compliance with investor protection and market integrity requirements under the US Securities Exchange Act of 1934.
- Proposed change, removes existing restriction on Ethereum staking by the Trust, enabling direct participation in Ethereum’s proof-of-stake network.
- Operational scope: Staking limited to the Trust’s own ether, without pooling, advertising, or guaranteed returns to investors.
- Risk framework: Sponsor will avoid exposure to slashing, forks, or unmitigated staking risks; activity subject to tax and legal guidance.
- Regulatory basis: Filed under Section 19(b)(1) and Rule 19b-4 of the US Securities Exchange Act of 1934.
- Investor benefit rationale: Staking intended to preserve assets, align returns with holding ether, and improve creation/redemption efficiency.
- Compliance reference: Aligns with Division of Corporation Finance’s May 2025 statement on protocol staking activities.
- Review period: US SEC has 45 days from Federal Register publication to decide, extendable to 90 days.
- Public engagement: Stakeholders can submit comments within 21 days of publication, citing file number SR-NASDAQ-2025-053.
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US SEC Extends Review Period for Grayscale Litecoin Trust Listing on NYSE Arca: Key Details and Implications
On 29 July 2025, the United States Securities and Exchange Commission (US SEC) issued Release No. 34-103574; File No. SR-NYSEARCA-2025-05, extending the review period for a proposal by NYSE Arca, Inc. to list and trade shares of the Grayscale Litecoin Trust (LTC). The proposal, first filed on 24 January 2025 and amended on 3 February 2025, seeks approval to list the Trust under NYSE Arca Rule 8.201-E, which governs Commodity-Based Trust Shares. The Grayscale Litecoin Trust aims to offer regulated exposure to Litecoin through exchange-traded shares. The US SEC’s extension pushes the decision deadline from 11 August 2025 to 10 October 2025, allowing additional time to evaluate the Trust’s compliance with investor protection, market integrity, and regulatory standards under the US Securities Exchange Act of 1934. Public comments remain open via the US SEC’s website, reflecting the agency’s commitment to transparency and stakeholder participation.
- Proposal scope: Seeks US SEC approval for NYSE Arca to list and trade Grayscale Litecoin Trust shares under Rule 8.201-E.
- Product objective: Offers investors regulated exchange-traded exposure to Litecoin without direct cryptocurrency custody.
- Regulatory framework: Filed under Section 19(b)(1) and Rule 19b-4 of the US Securities Exchange Act of 1934.
- Filing history: Original submission on 24 January 2025 replaced entirely by Amendment No. 1 on 3 February 2025.
- Review timeline: Proposal published on 12 February 2025; initial deadline extended to 13 May 2025, then to 11 August 2025.
- Latest extension: US SEC extends decision deadline by 60 days to 10 October 2025 under Section 19(b)(2) authority.
- Evaluation factors: Review addresses volatility, market surveillance, and compliance with investor protection standards.
- Investor implications: Approval could boost institutional adoption of Litecoin; prolonged review signals ongoing regulatory caution.
- Public engagement: Comments accepted via US SEC portal; transparency maintained through published submissions and notices.
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Singapore Launches Criminal Investigation into Tokenize Xchange Operator AmazingTech Pte Ltd After MAS Licence Rejection
On 1 August 2025, the Monetary Authority of Singapore (MAS) and the Republic of Singapore’s Commercial Affairs Department (CAD) announced a joint criminal investigation into AmazingTech Pte Ltd (ATPL), operator of the cryptocurrency platform Tokenize Xchange. The probe follows MAS’s rejection of ATPL’s application for a Major Payment Institution licence under the Singapore Payment Services Act 2019. ATPL had been operating under a temporary licensing exemption, which expired on 4 July 2025. MAS cited possible misconduct, including fraudulent trading, inadequate segregation of customer assets, and false representations during the licensing process. The matter was referred to the CAD, leading to the 31 July 2025 charging of ATPL director Hong Qi Yu under Section 238(4) of the Insolvency, Restructuring and Dissolution Act 2018. Investigations remain ongoing as regulators pursue investor protection and compliance enforcement within Singapore’s digital asset sector.
- Licence rejection: MAS declined ATPL’s Major Payment Institution licence under the Singapore Payment Services Act 2019.
- Temporary exemption expiry: ATPL’s exemption ended on 4 July 2025, requiring it to cease payment services and return all customer funds and tokens.
- Customer complaints: From mid-July 2025, MAS received reports of delayed fiat and token withdrawals from Tokenize Xchange users.
- Regulatory directives: MAS instructed ATPL to complete all pending withdrawals and address any asset shortfalls immediately.
- Asset segregation issues: MAS found indications of insufficient assets and failure to separate customer funds from company accounts.
- False representation allegation: ATPL may have misrepresented its asset segregation practices in its licence application.
- Referral to CAD: MAS escalated the matter to the Commercial Affairs Department for criminal investigation.
- Criminal charge: On 31 July 2025, ATPL director Hong Qi Yu charged with fraudulent trading under Section 238(4) of the Insolvency Act.
- Penalties: Offence carries up to seven years’ imprisonment, a fine, or both under Singapore law.
- Ongoing investigation: CAD continues inquiries into ATPL’s operations and potential criminal breaches.
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US SEC’s Crypto Task Force Launches National Roundtable Tour to Expand Stakeholder Dialogue on Regulatory Framework
On 1 August 2025, the United States Securities and Exchange Commission (US SEC) published Release No. 2025-102 titled “On the Road: SEC Crypto Task Force to Host a Series of Roundtables Across the U.S.“ under Release No. 2025-102 announcing a nationwide outreach initiative titled “Crypto Task Force on the Road.” Led by Commissioner Hester M. Peirce, the program will host roundtables in ten US cities between August and December 2025. The initiative targets early-stage crypto ventures with fewer than ten employees and under two years in operation, aiming to include voices not represented in prior policymaking discussions. The US SEC will gather insights on operational realities, regulatory concerns, and innovation challenges facing smaller crypto entities. While the tour will not create new rules, it aligns with the SEC’s obligations under the US Securities Exchange Act of 1934 to ensure fair markets and protect investors. Feedback from the sessions may inform future policy, guidance, or proposed rules related to digital assets and decentralised projects.
- Objective: Engage small crypto projects to understand operational and regulatory issues impacting early-stage market participants.
- Eligibility: Limited to projects under two years old with fewer than ten employees and no prior roundtable participation.
- Schedule of roundtables:
- 4 August 2025 – Berkeley, California
- 19 August 2025 – Boston, Massachusetts
- 4 September 2025 – Dallas, Texas
- 15 September 2025 – Chicago, Illinois
- 25 September 2025 – New York City, New York
- 3 October 2025 – Irvine, California
- 24 October 2025 – Cleveland, Ohio
- 29 October 2025 – Scottsdale, Arizona
- 12 November 2025 – New York City, New York
- 5 December 2025 – Ann Arbor, Michigan
- Registration process: Email crypto@sec.gov with “Crypto on the Road” in the subject line and preferred city.
- Representation limits: One or two delegates per project; must include a brief team and project description.
- Policy impact: Feedback will inform potential future guidance and proposals on crypto asset regulation and disclosure.
- Non-rulemaking nature: The tour is an outreach effort, not a formal rulemaking process.
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US CFTC Launches Listed Spot Crypto Trading Initiative
On 4 August 2025, the United States Commodity Futures Trading Commission (US CFTC) announced an initiative to enable trading of spot crypto asset contracts listed on a CFTC-registered futures exchange, or designated contract market (DCM). Acting Chairman Caroline D. Pham framed the move as the first operational step in the agency’s “crypto sprint” to implement recommendations from the President’s Working Group on Digital Asset Markets report. Positioned as a federally coordinated effort with the US Securities and Exchange Commission’s (US SEC) Project Crypto, the plan leverages existing Commodity Exchange Act powers to regulate spot crypto trading without additional legislation. The initiative invites public comment by 18 August 2025 and signals the CFTC’s intention to establish regulated spot crypto markets under federal oversight.
- Regulatory objective: Bring spot crypto asset contracts under CFTC oversight via listing on registered DCMs.
- Political alignment: Initiative advanced under President Trump’s policy vision to position the US as a global crypto leader.
- Legal authority: Uses Section 2(c)(2)(D) of the Commodity Exchange Act and Part 40 of CFTC regulations to regulate without new laws.
- Cross-agency scope: Consultation considers potential securities law implications, enabling policy coordination with the US SEC.
- Public consultation: Stakeholders can submit comments by 18 August 2025 via the CFTC website; all submissions will be publicly posted.
- Transparency: Publication of comments allows market participants to evaluate a range of positions and policy considerations.
- Operational readiness: Utilises existing statutory powers to enable immediate trading infrastructure for federally regulated spot crypto markets.
- Market impact: Positions the CFTC as a lead regulator in developing a compliant and transparent national spot crypto trading environment.
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US CFTC Commissioner Kristin Johnson Summarises 2025 Global Regulators Roundtable on AI, Digital Assets, and Market Resilience
On 5 August 2025, United States Commodity Futures Trading Commission (US CFTC) Commissioner Kristin N. Johnson released a statement on the 2025 Regulators Roundtable on Financial Markets Innovation and Supervision of Emergent Technology, held in London. The event convened market and prudential regulators, central bankers, and consumer protection authorities from the US, UK, and Europe to address AI integration, cyber resilience, digital assets, market structure, and operational risk management. A follow-up public-private roundtable on AI and digital assets, moderated by Bénédicte Nolens of the BIS Innovation Hub Hong Kong Centre, gathered regulators, technology providers, and market participants for discussions under the Chatham House Rule. The dialogues reaffirmed the need for forward-looking regulatory frameworks, cross-border coordination, and robust public-private collaboration to manage technological change, operational vulnerabilities, and emerging risks in global markets.
- AI governance: Participants examined AI’s use in trading, compliance, and surveillance, highlighting risks in explainability, bias, and post-deployment oversight.
- Cyber resilience priorities: Reviewed major incidents, including the 2023 ION Derivatives ransomware attack, 2024 CrowdStrike outage, and 2025 Bybit exploit, stressing continuous testing and incident readiness.
- Proposed CFTC resilience rule: Would require FCMs, swap dealers, and major swap participants to implement technology security programs, third-party oversight, and disaster recovery plans; DCO safeguards to expand under MRAC recommendations.
- Third-party risk: Growing concentration in cloud, AI, and cyber service providers seen as a systemic risk driver; DORA cited as a model for ICT oversight.
- Digital assets and stablecoins: Discussions stressed protecting asset segregation, settlement finality, and cross-border coordination as tokenisation and stablecoin adoption expand, especially in emerging markets.
- Incident response collaboration: Advocated standardised information-sharing protocols and joint regulator–provider response playbooks for market disruptions.
- AI in surveillance: Noted potential for LLM-powered tools in market abuse detection, sanctions monitoring, and multilingual data analysis; underscored governance and transparency needs.
- Crypto market oversight gaps: Identified off-chain trading opacity, wash trading risks, and AI-amplified manipulation, citing a $700 million illicit trading case in Japan as an example.
- Public-private engagement: Highlighted the role of co-designed surveillance frameworks, regulator capacity-building, and continued international forums for alignment on supervisory standards.
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