Summary
- SEC permits in-kind creations and redemptions for digital asset ETPs, a turning point in market infrastructure
- Aligns digital asset products with traditional ETF mechanics, which can improve efficiency and reduce costs
- Opens the door for broader institutional participation through clearer regulatory guidance
- Lukka supports this evolution with institutional-grade data, real-time risk analytics, and compliance tools
- Supports secure, transparent operations for ETP issuers, custodians, and infrastructure providers through institutional-grade data and compliance tools
What Are Digital Asset ETPs?
A digital asset exchange-traded product (ETP) provides market exposure to crypto assets. Spot ETPs hold the underlying asset (e.g., Bitcoin), while others may use derivatives. A spot Bitcoin ETP holds Bitcoin on behalf of investors, allowing them to track its price movements without handling private keys or wallets. These products aim to make digital asset investing more accessible, secure, and compliant with existing financial regulations.
A Historic Step Toward Market Maturity
On July 29, 2025, the U.S. Securities and Exchange Commission permitted in‑kind creation and redemption mechanisms for crypto asset exchange‑traded products (ETPs), including Bitcoin and Ether ETPs. This decision marks a major advancement in aligning digital asset investment products with traditional financial standards.
In-kind processes allow market participants to deliver or receive the underlying digital asset directly, rather than converting to or from cash. This can reduce inefficiencies and trading slippage, and improve operational transparency.
Why This Matters
The implications of this SEC decision are significant:
- Bridges blockchain-native operations with established market frameworks, creating a seamless connection between digital assets and traditional capital markets.
- Lowers operational barriers for asset managers and authorized participants by aligning with familiar ETF processes.
- Reduces risks tied to cash handling and conversions through direct asset transfers.
- Improves cost efficiency for both issuers and investors via reduced slippage and operational friction.
- Strengthens market trust and transparency, accelerating institutional adoption.
This is a clear signal: digital asset infrastructure is maturing, and institutional readiness is accelerating.
Lukka’s Role in Enabling the Next Phase of Digital Asset Growth
As digital asset markets evolve, data integrity, risk transparency, and auditability are essential. Lukka delivers the tools that ETP participants, and their regulators, rely on.
Before allowing assets to enter their platforms, ETP issuers should use Lukka’s services to ensure incoming funds are clean, compliant, and free from links to illicit activity. This proactive screening safeguards market integrity, reduces regulatory risk, and protects institutional reputations.
Blockchain Risk Intelligence and Analytics
Lukka Blockchain Analytics helps institutions:
- Assess risk exposure with AML Risk Reports, featuring a C-Score (0–99) calculated from 380+ AML/CFT risk indicators
- Trace the source and destination of funds in Omni, mapping flows across multiple blockchains and up to hundreds of hops.
- Monitor wallets and transactions in real time via the Monitoring Panel, with automated alerts and threshold settings
- Generate audit-ready case reports using the Case Management module, supporting compliance, SAR preparation, and legal processes
Built for Institutional Standards
Lukka meets rigorous standards including:
- SOC 1 Type II and SOC 2 Type II compliance
- ISO/IEC 27001 certification
- NIST cybersecurity assessment
- Audit‑ready reporting and data integrity controls
These credentials are critical for firms operating in regulated financial markets.
End-to-End Compliance Infrastructure
Lukka’s platform integrates all core compliance and analytics capabilities into a unified lifecycle framework, enabling institutions to identify, assess, and mitigate risk across digital asset operations.
This includes:
- Entity Due Diligence for exchanges, VASPs, and counterparties
- AML Risk Reports for address-level scoring and sanctions/illicit finance detection
- Address screening and continuous monitoring through the Monitoring Panel
- Liquidity Pool Risk Reports for token-holder and pool-level AML/CTF exposure analysis
- Multi-chain fund tracing with Omni and the Visualizer for historical flow analysis and proximity risk detection
- AML Case Management for investigations, SAR workflows, and documentation
- Audit-ready reporting and transparent evidence trails for full regulatory traceability
By combining these tools, Lukka provides an end-to-end compliance infrastructure that scales with institutional needs, from onboarding and ongoing monitoring to investigations and audit preparation.
Why Does This Matter?
Whether you are an issuer, broker-dealer, custodian, auditor, or infrastructure provider, this regulatory shift will shape how you operate. Compliance, transparency, and operational efficiency will become even more important as the market scales.
Lukka provides the foundational data and tooling you need to confidently participate in this evolving space.
Take the Next Step
In-kind approvals mark a new chapter for digital asset finance. Having the right partner in place is essential to meet the demands of regulators, investors, and internal stakeholders.
Contact us to learn how Lukka can support your business with trusted data, analytics, and compliance solutions.
