From what I understand, in-kind models basically allow existing crypto holders to switch to an ETF, or redeem their ETF to crypto at a later date. Compared to cash cash-only model, it definitely sounds more attractive since you own BTC to some extent. However, this still depends on the ability of the provider to provide a liquid converting option, if any. I believe this is attractive for those who aren't that strict with their investment and can accept the risk that their crypto is not fully in their hands. That being said, it remains to be seen if people will just buy BTC directly instead of buying ETFs from the market. CMIIW.
Personally, though, I'd rather hold my own BTC and store it somewhere safe instead of risking my existing BTC holding just to get a little more exposure to the market.