Important Highlights
- The SEC pushed its deadline to September 8, 2025, for Bitwise’s in-kind redemption request.
- This decision could shape how crypto ETFs function in the U.S.
- In-kind redemptions would eliminate the need for investors to sell their ETF shares for cash by allowing them to exchange them directly for Bitcoin or Ether.
So, what’s the latest buzz around crypto ETFs?
If you’ve been keeping an eye on the crypto scene, you know that crypto ETFs are all the rage in the investment community.
But here’s the latest development: the SEC is hitting the pause button on a major decision regarding in kind redemptions for Bitwise’s spot Bitcoin and Ether ETFs.
In-kind redemptions allow investors to receive the actual cryptocurrency Bitcoin or Ether in exchange for their ETF shares rather than cashing them out for dollars.
Sounds more efficient, right? It can also be more tax friendly. But as usual with crypto, things aren’t moving quickly.
Why This Delay Matters ?
The SEC announced this week that it needs more time to think things through.
The agency extended the deadline of the decision to September 8, 2025, stating that he wants to “fully consider the issues raised.”
Enough is appropriate but this is not the first delay, and perhaps it will not be final.
Nevertheless, this decision may have real implications.
If approved, this crypto will make ETF more attractive especially for institutions that want more flexibility and reduced headache.
What Are In-Kind Redemptions, Anyway?
Let’s break it down.
In most traditional ETFs, in-kind redemptions are standard.
You swap your shares for the actual asset the fund holds like gold or stocks without triggering taxes from a sale.
With crypto ETFs, though, this hasn’t been allowed yet.
If the SEC approves in-kind redemptions, crypto investors could finally enjoy the same perks as those in traditional funds.
That means:
- No forced selling of crypto to get cash
- Lower capital gains taxes
- Better cost efficiency for large trades
So Why Is the SEC Holding Back?
That’s the million-dollar question. On paper, it seems like a win. But in practice, the SEC wants to be cautious.
Handling crypto assets involves unique risks like security, custody, and fraud prevention.
The agency says it simply needs more time to review.
Interestingly, this comes even as the SEC is supposedly warming up to crypto.
Ever since Paul Atkins became Chair, he has been discussing welcoming innovation and moving from the antiquated “regulation by enforcement” approach.
What interests me is what he does or does not do. And in this case, staying silent only seems to add needless complication.
This Isn’t Just About Bitwise
Bitwise isn’t the only firm waiting for answers. BlackRock, Fidelity, VanEck, and 21Shares have also filed similar requests for their own crypto ETFs.
Everyone’s hoping to offer products that are easier to use, cheaper to manage, and more competitive with traditional ETFs.
Earlier this month, the SEC delayed a similar decision for BlackRock’s Ethereum ETF so this isn’t isolated. It’s part of a bigger, slower process.
What Happens Next?
Between now and September 8, a few things could happen:
- The SEC could approve in-kind redemptions. That would be huge for the industry.
- It could deny the request, keeping ETFs cash-only and less efficient.
- Or it might delay again (yes, really), asking for public comments or more data.
No matter what, the outcome will likely set the tone for future crypto ETF offerings in the U.S.
Why You Should Care
Even if you’re not investing in a crypto ETF today, this affects the whole ecosystem.
Approving in-kind redemptions would mean crypto is being treated more like mainstream assets.
It can attract large investors, greater liquidity and better products for all.
On the other hand, continuous delays may disappoint both issuers and investors and slow down innovation while picking up things.