The U.S. Securities and Exchange Commission (SEC) has once again postponed a key ruling—this time regarding in-kind redemptions for Bitwise’s spot Bitcoin and Ether ETFs on the NYSE Arca exchange. The decision, originally due this month, has now been pushed further under the agency’s standard 90-day review window.
What Are In-Kind Redemptions and Why They Matter
In-kind redemptions allow investors to redeem ETF shares for the actual underlying assets—in this case, Bitcoin (BTC) or Ether (ETH)—instead of cash. This structure is already common in traditional finance but is still in limbo for crypto ETFs.
This model could reduce taxable events by avoiding the sale of assets for cash, giving institutional investors a major tax advantage.
However, regulatory uncertainty continues to slow adoption, leaving fund issuers like Bitwise waiting for clear approval from the SEC.
SEC Cites Need for More Time to Evaluate Rule Change
According to an official filing from the SEC, the extension is intended to provide more time to evaluate the proposal and the regulatory implications involved in offering crypto ETFs with in-kind redemptions.
“The Commission finds it appropriate to designate a longer period within which to take action,” the SEC wrote, citing the complexity of issues raised.
The agency now has up to 90 days to make a final decision on the proposed rule change.
Criticism Over SEC’s Delay Tactics
This move adds to growing criticism from the crypto industry about the SEC’s slow and inconsistent approach to digital asset regulation. Just weeks ago, legal representatives for Grayscale accused the regulator of violating approval deadlines for a separate ETF product.
Repeated delays have raised questions about whether the SEC is intentionally stalling crypto innovation in the financial markets.
Despite previous product approvals, the SEC’s internal divisions have led to conflicting decisions, further muddying the regulatory landscape.
Changing Regulatory Tone Under New SEC Leadership
Since the transition of leadership at the SEC, observers note a shift in the regulator’s stance toward crypto. Current Chair Paul Atkins has expressed support for tokenization as a market innovation and vowed to replace vague rules with regulatory clarity.
**“That day is over,” Atkins said, referring to the era of regulation through enforcement.”
This changing tone may eventually pave the way for broader ETF innovations, but the delay on Bitwise’s in-kind redemption request reflects that challenges still remain.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.