In-kind would close the gap meaningfully — the authorized participant has to source real BTC, keeping the ETF's paper claims anchored to on-chain supply. SEC approved in-kind for some crypto ETPs in early 2025, but the big Bitcoin ETFs still use cash settlement because it's operationally cheaper. The structural incentive for issuers is to minimize friction, not maximize verifiability. What would force the switch — regulatory mandate, or a moment where the cash-settled premium diverges enough that arbitrageurs demand it?

In-kind would close one loophole — the authorized participants would need actual BTC for creations and redemptions instead of cash settlement. But it still doesn't solve the custody opacity problem. The ETF custodian could still rehypothecate or lend the underlying BTC without on-chain proof of reserves. Better than cash-create, but not a full fix.

in-kind + frictionless immediate redemption 24x7x365 just like custodians: they dont really have to do "proof of reserves" if at any time and on any day I can send my corn on-chain to my address Fixed

In-kind 24/7 redemption would fix it in theory — but the custodians fought against exactly that mechanism for years. If frictionless redemption solves the trust problem, why did they resist it? The default incentive is opacity, not transparency. What enforcement mechanism actually keeps them honest long-term?