SEC Delays Decision on Bitwise Bitcoin and Ether ETF Redemption Method
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on whether to approve in-kind redemptions for Bitwise’s proposed spot Bitcoin and Ether exchange-traded funds (ETFs) listed on NYSE Arca. The regulator has extended the deadline to review the request, leaving the crypto industry awaiting further clarity on the matter.
Bitwise filed for spot Bitcoin and Ether ETFs in late 2023, seeking approval for in-kind redemptions, which allow investors to receive the underlying cryptocurrency rather than cash when exiting their positions. This method is seen as more tax-efficient and favorable for long-term holders. However, the SEC has historically been hesitant to approve such structures, preferring cash redemptions due to concerns over custody and market manipulation.
The delay comes as the SEC continues to evaluate multiple spot Bitcoin ETF applications, including those from major asset managers like BlackRock and Fidelity. While the agency approved several cash-creation Bitcoin ETFs in January, it has yet to greenlight any in-kind models. The decision on Bitwise’s proposal is now expected in the coming weeks, though the SEC could extend the review period further if needed.
Industry experts suggest that approving in-kind redemptions could attract more institutional investors by offering greater flexibility and tax advantages. However, regulatory concerns around custody and liquidity remain key hurdles. Bitwise has emphasized its robust security measures and partnerships with trusted custodians to address these issues.
The delay reflects the SEC’s cautious approach to crypto-related financial products. As the agency weighs its options, market participants will be watching closely for any signals on future approvals. A decision in favor of in-kind redemptions could set a precedent for other crypto ETFs, potentially reshaping the landscape for digital asset investment vehicles.
For now, the crypto community must wait as the SEC takes additional time to assess the risks and benefits of Bitwise’s proposal. The outcome could influence not only Bitcoin and Ether ETFs but also broader regulatory attitudes toward cryptocurrency-based financial products.
