SEC Delays Decision on Spot Crypto ETF Features Including In-Kind Redemptions and Staking

The U.S. Securities and Exchange Commission (SEC) has postponed decisions on key updates proposed for several spot cryptocurrency ETFs. These updates include in-kind redemptions and Ethereum staking options—features that fund issuers hope will enhance the appeal of their products.

On Monday, the SEC extended its review period for in-kind redemptions on WisdomTree’s Bitcoin Fund (BTCW) and VanEck’s Bitcoin and Ethereum Funds (BITB, ETHW). The agency also delayed a decision on Grayscale’s proposal to allow staking within its Ethereum Trust (ETHE) and Mini Ethereum Trust. Grayscale’s exchange partner, NYSE Arca, originally submitted the staking request in February.

In March, Cboe submitted an amended filing on behalf of five ether ETF issuers, including Fidelity (FETH), Franklin Templeton (EZET), VanEck, and Invesco/Galaxy. Despite staking being approved for ETFs in international markets like Hong Kong, Canada, and Europe, the SEC has yet to grant similar permissions in the U.S.

With newly confirmed SEC Chair Paul Atkins in office, industry insiders speculate that policy direction could shift. However, analysts caution against expecting swift changes. “The SEC will move at its own pace regardless of what other regulators are doing,” said James Seyffart, ETF analyst at Bloomberg Intelligence.

The SEC must now make a decision on Bitwise’s and WisdomTree’s in-kind redemption proposals by June 3, and rule on Grayscale’s staking request by June 1.

These regulatory delays add another layer of uncertainty for the crypto ETF market, even as institutional interest in digital asset products continues to grow. Stakeholders remain hopeful that the SEC will eventually align with global trends in crypto ETF innovation.