Bitcoin, Ethereum ETFs In-Kind Redemptions Delayed by SEC

The U.S. Securities and Exchange Commission (SEC) has once again pressed pause — this time on Fidelity’s request to allow “in-kind redemptions” for its proposed spot Bitcoin (FBTC) and Ethereum (FETH) ETFs. This feature would let authorized participants trade ETF shares directly for the underlying crypto assets instead of cash, which could lower trading costs and reduce tax burdens for investors.

Fidelity isn’t alone. Other major players like BlackRock, VanEck, and WisdomTree are also seeking approval for similar redemption methods in their crypto ETFs. While the SEC has acknowledged these filings, including BlackRock’s request for its Ethereum ETF, it hasn’t given a clear timeline for when it will make a final decision on Fidelity’s proposal.

This cautious approach is part of a broader trend. Back in April, the SEC also delayed decisions on in-kind redemption requests from WisdomTree (for its BTCW and ETHW funds) and VanEck’s Bitcoin Fund (BITB). At the same time, it’s still reviewing proposals related to Ethereum staking in ETFs, with updates expected in the coming months.

Industry watchers believe the SEC might eventually greenlight in-kind redemptions later this year, which would improve how these ETFs operate and make them more attractive to big investors. As the SEC continues its review, the crypto industry awaits further clarity on the regulatory framework for these innovative financial products.