Just in: SEC Delays In-Kind Redemptions for Bitcoin and Ethereum ETFs

Kelvin Munene Murithi
May 23, 2025
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Just in: SEC Delays In-Kind Redemptions for Bitcoin and Ethereum ETFs

Highlights

  • SEC delays in-kind redemptions for Fidelity’s BTC and ETH ETFs amid growing issuer pressure.
  • BlackRock’s ETH ETF filing acknowledged, signaling rising SEC interest in ETF flexibility.
  • Grayscale, Bitwise, and WisdomTree face June deadlines on ETF staking, redemptions.

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Fidelity’s request to include in-kind redemptions in its spot Bitcoin and Ethereum exchange-traded funds (ETFs). This decision comes as issuers across the crypto industry continue to seek approval for features aimed at improving ETF operations and efficiency.

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SEC Postpones Fidelity’s In-Kind Redemption Feature

Fidelity is among several major asset managers that have filed to allow in-kind redemptions in their spot cryptocurrency ETFs. In-kind redemptions let authorized participants exchange ETF shares directly for the underlying crypto assets, instead of cash. These mechanisms are commonly used in traditional ETFs to reduce trading costs and tax consequences.

While the SEC recently acknowledged a similar request from BlackRock related to its spot Ethereum ETF, it has decided to delay Fidelity’s proposals for both Bitcoin and Ethereum ETFs. The regulatory agency has not provided a timeline for when a final decision might be made.

Fidelity is not the only issuer facing delays. In April, the SEC also postponed rulings on in-kind redemption proposals from WisdomTree for its Bitcoin Fund (BTCW) and Ethereum Fund (ETHW), as well as VanEck’s Bitcoin Fund (BITB).

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BlackRock Progress and Ongoing Industry Pressure

Earlier this week, the US SEC acknowledged BlackRock’s filing regarding in-kind redemptions for its spot Ethereum ETF. While this does not mean approval, it signals that the SEC is considering the feature more seriously. BlackRock, like Fidelity and others, aims to structure its products in ways that mirror traditional ETFs.

Several asset managers believe that in-kind redemptions will bring operational efficiency to cryptocurrency ETFs. Industry participants are pressing the SEC to adopt consistent standards for all issuers, especially as other regions move forward.

Jurisdictions such as Canada, Hong Kong, and parts of Europe have already approved similar features for crypto-based ETFs.

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Upcoming Deadlines for Other Crypto ETF Features

In addition to in-kind redemption proposals, the SEC is also reviewing other ETF features. The agency has set a deadline of June 1 to decide on Grayscale’s request to add staking to its spot Ethereum ETF. Another decision is expected by June 3 for Bitwise and WisdomTree’s updated filings, which also seek approval for in-kind redemptions.

The SEC also recently delayed its decision on a proposal by 21Shares to introduce staking into its Ethereum ETF. This is consistent with a broader trend, as the Commission has postponed several decisions regarding crypto-linked ETFs over the past few months.

Staking, which involves earning rewards by helping secure blockchain networks, is not yet permitted in U.S.-approved spot crypto ETFs. However, this could change following the appointment of Paul Atkins as the new SEC Chair. Atkins, confirmed by the Senate last week, is expected to take a fresh look at crypto ETF policies.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.