@Alther 29 July 2025 more from that month

Redemption-in-Kind: The Sweet Promise of the Crypto World That Is Unfriendly to the People Financial technology is a bit like a maze in a lot of ways: on the surface, it looks complicated, but its function is straightforward—to move value from one hand to the other as efficiently as possible. Yet sometimes, in simplifying, we insert tiny doors that are known only to those who have gone through them. Redemption in-kind may sound technical. And it is. It is a procedure—in the context of ETFs—where instead of receiving cash, the redeeming party simply says: "I want the underlying assets." Simple. Clean. No fuss in the market. But what is a procedure if we do not ask: for whom? Interestingly, redemption in-kind isn’t available to everyone. It’s not a feature that pops up when you open an investment app and press the “sell” button. It’s a dedicated path—exclusive—for certain participants, known as authorized participants. The term itself feels like something that’s been locked away from the start.

And this is the aspect that is usually forgotten. A lot of individuals discuss efficiency, taxation, liquidity. But what could be more interesting is that redemption in-kind allows some institutions to accept Bitcoin or Ethereum directly—and extract it from the traditional financial system—without leaving a cash trace. Is this significant? Perhaps not today. But let’s assume something: a crisis. Currencies plummet, public trust is fragile, the banking system begins to tighten its borders. At that point, access to hard assets, which are not dependent on banks or countries, becomes something very meaningful. And redemption in kind is the silent path to that. Are we being too cynical to call it a backdoor? Possibly. But we might also be too naive to think of it as no more than a logistic convenience. The world of finance isn't just about numbers—it's about access. And access, almost always, isn't equally shared. It's also worth looking at this from a timing point of view. Redemption in kind does not disrupt the market. It does not cause price spikes. It is quiet, almost silent. And exactly because of that, it can be used long before panic starts. Someone, somewhere, could be swapping their ETF holdings for real Bitcoin right now. Invisible. Without selling. Without anyone knowing. We call it efficiency. In a volatile world, though, efficiency can very quickly convert its intent into protection—or even escape. Ironically, cash withdrawal is maybe the single feature within the crypto ecosystem that comes closest to the idea of "getting outside of the system." And yet this feature is not one that is available to most crypto users. It's funny, if not sad. And we'll maybe talk about this again, a few years from now, in very different situations.