SEC Commissioner Hester Peirce indicated that in-kind redemptions for crypto ETFs could soon become a norm.Key Takeaways
- The SEC delayed its decision on in-kind creations and redemptions for Bitwise Bitcoin and Ethereum ETFs until September 2025.
- The proposed in-kind model would allow authorized participants to transfer actual crypto assets instead of cash for ETF share creation and redemption.
The US SEC has extended its review period for NYSE Arcas proposal to allow in-kind creations and redemptions for the Bitwise Bitcoin ETF Trust (BITB) and Bitwise Ethereum ETF (ETHW).
The regulator has pushed the deadline to September 8, 2025, from July 25, 2025, citing the need for “sufficient time to consider the proposed rule change.”
The in-kind model under review would allow Authorized Participants to transfer Bitcoin and Ethereum directly, replacing the current cash-based creation and redemption process. The approach mirrors traditional commodity ETF mechanics and aims to reduce slippage and simplify operations.
Under the proposed system, Authorized Participants would be able to deliver actual Ether to the ETF issuer in exchange for new shares, and redeem shares to receive Ether back, instead of cash settlements.
Competing asset managers, such as 21Shares, Fidelity, WisdomTree, BlackRock, and VanEck, have filed similar requests for in-kind creation and redemption capabilities for their crypto ETFs. The SEC recently delayed its decision on BlackRocks spot Ethereum ETF proposal regarding in-kind creation and redemption.
Despite the current obstacles, ETF experts are optimistic that the proposals are unlikely to be rejected outright, as SEC Commissioner Hester Peirce has indicated that in-kind creations and redemptions for crypto ETFs are “definitely coming at some point.”