SEC Delays Decision on Bitwise Bitcoin, Ethereum ETFs' In-kind Redemptions

In brief

The U.S. Securities and Exchange Commission extended its timeline for weighing in on in-kind redemptions for two ETFs focused separately on Bitcoin and Ethereum.
In-kind redemptions allow investors to exchange shares of an ETF for its underlying tokens.
The SEC’s new deadline is September 8.

The U.S. Securities and Exchange Commission has delayed its decision on in-kind redemptions for the Bitwise Bitcoin ETF Trust and Bitwise Ethereum ETF, according to a filing on Wednesday, the latest sign of U.S. regulators’ restraint even as the political environment for crypto has improved.

The SEC will rule by September 8, according to the filing, and could at that point approve or deny the request, or elect to review the matter further, the document said.

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change, and the issues raised therein,” the filing said.

In-kind redemptions, in which investors can redeem ETF shares for a fund’s underlying tokens to avoid certain tax liabilities, have been a sensitive top, with regulators raising concerns about their complexity and security and issuers eager to provide the same feature as is available in non-crypto ETFs.

On Tuesday, the SEC set a new deadline of Aug. 26 on BlackRock‘s request to allow in-kind redemptions for its iShares Ethereum Trust (ETHA), extending the maximum 90-day review period just days prior to the initial deadline, according to a filing.

The latest notice comes as asset managers flood regulators’ desks with a flurry of applications for ETFs tracking the prices of memecoins, altcoins and even NFTs, as well as requests to add staking and other attractive offerings to existing funds.

The filings have piled up as U.S. President Donald Trump’s pro-crypto administration has ratcheted back crypto industry regulations set during the Biden administration.

But although the SEC has welcomed pro-crypto chairman Paul Atkins and shaken out digital asset skeptics from its ranks since January, it continues to exercise reserve in its dealings with crypto-based investment proposals.

The SEC put Grayscale’s multi-token ETF under review last week, inviting a strongly worded letter from the asset manager. The federal regulator has also not yet approved a rash of long-awaited spot Solana ETFs, although there are signs that might happen soon.

Bitcoin was recently trading at about $118,900, up 1.1% in the past 24 hours, according to data provider CoinGecko. Ethereum was trading at $3,360 during the same period, up 9% during the same period as its price rallied to a five-month high, the same data shows.