SEC Postpones Decision on Bitwise ETF Redemptions
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on in-kind redemptions for Bitwise’s spot Bitcoin and Ethereum exchange-traded funds (ETFs).
As per a new filing, the SEC has extended consideration for more proposed rule changes associated with the Bitwise Bitcoin ETF and Ether ETF listed on NYSE Arca. In-kind redemptions would allow ETF investors to get the actual underlying asset—either Bitcoin or Ether—rather than cashing out. It may enable a tax benefit to investors and bring crypto ETFs more in line with existing commodity and stock ETFs.
According to the SEC, more time was required “to allow sufficient time to consider the proposed rule change and the issues raised.” While the review can last up to 90 days, the SEC will not lock into a date for a final decision, although it must rule on the application by September 8 at the latest.
Wider Implications for the Crypto Market
This delay is part of a broader pattern. The SEC has historically been cautious in assessing crypto-related proposals for ETFs. Earlier this month, the SEC delayed the deadline for BlackRock‘s Ethereum ETF filing over similar concerns.
People are saying the SEC is purposely delaying approvals; in some cases, they’re being placed under legal pressure. According to Grayscale, the agency’s delay over its Digital Large Cap ETF facially violated its statutory deadlines and procedures.
The crypto industry shows optimism going to new heights despite delays. The SEC has been more open to innovation since Chair Paul Atkins took charge, replacing Gary Gensler. Atkins believes that financial products based on blockchain technology could be highly useful in the modern marketplace and has called for clearer, more transparent regulations.
A Cautious Shift in Policy
The SEC seems more receptive to crypto than earlier. Still, the agency’s latest maneuvers show it is still maneuvering cautiously. In-kind redemption complexities differ from ordinary cash redemption technically, regulatorily, and security-wise. This is the paraphrased text (21 words):
With the unique nature of digital assets and the constant need to protect investors, these challenges need to be looked upon by the agency.
As crypto ETFs gain popularity and asset managers extend their offerings into areas like staking and memecoins, the SEC’s final decision on in-kind redemptions could set an important precedent for how crypto investable products develop in the U.S. financial system.
