In-kind redemptions allow Bitcoin ETF investors to redeem their shares for actual Bitcoin rather than cash. This creates additional accountability by requiring the ETF to hold the Bitcoin it claims to have, as it must deliver the asset upon redemption. This mechanism makes fractional reserve practices more difficult, as any discrepancy between claimed and actual holdings would quickly be exposed.

This structure is also directionally the opposite of government actions like Executive Order 6102, which confiscated gold holdings. By requiring Bitcoin redemptions, ETFs reduce the reliance on fiat systems that are easier to control or seize. While this does not eliminate the possibility of government interference, it introduces logistical and operational barriers, making such actions more challenging. In-kind redemptions enhance transparency and align incentives toward greater accountability.