SEC Delays Decision on Crypto ETF Redemptions as Regulatory Approach Shifts
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The United States Securities and Exchange Commission (SEC) has once again postponed its decision on allowing in-kind redemptions for exchange-traded funds (ETFs). This decision affects Bitwise’s proposed Bitcoin and Ethereum spot ETFs listed on NYSE Arca.
According to a new SEC filing, the commission has extended its review period, citing the need for more time to study the proposal and related concerns. In-kind redemptions would let investors trade their ETF shares directly for Bitcoin or Ether instead of cash. To this end, this move could have tax benefits but also raises regulatory questions. Meanwhile, the SEC’s broader approach to crypto is also changing under new leadership.
SEC Extends ETF Review Deadline Again
The SEC’s delay concerns a proposed rule change that would permit in-kind redemptions for Bitwise’s Bitcoin and Ethereum spot ETFs. As it stands, these ETFs will allow investors to gain exposure to crypto assets without directly holding them. In-kind redemptions are a method where investors receive actual crypto assets, rather than cash, when they sell their ETF shares. To this end, this setup could reduce tax burdens compared to traditional cash redemptions.
However, the SEC has not yet approved this system. In its recent statement, the commission said it needs more time to consider the proposal and the questions it raises. Hence, while the original review time is 45 days, it can be extended up to 90 days.
To this end, critics argue the SEC is moving too slowly, with many accusing the agency of delaying progress on crypto regulations unnecessarily.
New Regulatory Direction Toward Crypto
It is important to note that this is not the first time the SEC has delayed a crypto-related decision. Earlier in July, Grayscale, a major digital asset manager, criticized the SEC for pausing approval of its Digital Large Cap ETF. Grayscale’s lawyers claimed the delay broke formal procedures and ignored previous approvals. These ongoing postponements have frustrated many crypto supporters.
However, since Paul Atkins became SEC Chair under the Trump administration, there’s been a noticeable shift. Atkins recently said that the SEC now supports innovation like tokenization, a way to represent real-world assets digitally. Unlike his predecessor, Gary Gensler, Atkins says his goal is to create clear crypto rules instead of regulating by enforcement. He emphasized that innovation should not be blocked by unclear policies.
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