SEC Postpones Key Decisions on In-Kind Redemptions and Ether ETF Staking

The U.S. Securities and Exchange Commission (SEC) has once again delayed rulings on pivotal proposals that could shape the future structure of cryptocurrency exchange-traded funds (ETFs). The agency has extended deadlines to early June for decisions on in-kind redemptions for spot Bitcoin and Ethereum ETFs, as well as a separate proposal to allow staking within Ethereum-based ETF products.

The delay affects several asset managers including WisdomTree, VanEck, and Bitwise, who have advocated for in-kind redemption models to enhance tax efficiency, lower operational costs, and improve market liquidity. Under the proposed structure, investors would be able to redeem ETF shares directly for the underlying cryptocurrency assets—such as Bitcoin or Ether—rather than through cash transactions. This method is already widely used in traditional ETF markets and is seen as a vital tool for minimizing capital gains taxes and increasing ETF scalability. The SEC is now expected to deliver a decision on this matter by June 3, 2025.

Staking Within Grayscale Trusts Under Review

In a separate but equally significant delay, the SEC has also postponed its decision regarding Grayscale Investments’ proposal to enable staking within its Ethereum Trust (ETHE) and the Ethereum Mini Trust. The proposal aims to allow the trust vehicles to actively participate in Ethereum’s proof-of-stake (PoS) network by staking a portion of their holdings, potentially generating additional yield for investors through validator rewards.

Staking is a foundational mechanism within the Ethereum ecosystem following its transition from proof-of-work to proof-of-stake consensus in September 2022. The ability to stake within a regulated ETF-like product could bridge traditional finance with decentralized finance (DeFi), offering mainstream investors access to staking yields without directly interacting with complex crypto protocols. The SEC’s final ruling on the staking component is now scheduled for June 1, 2025.

Broader Implications for U.S. Crypto Markets

These delays come amid a significant leadership transition at the SEC, with newly confirmed Chairman Paul Atkins now guiding the agency. Known for his market-friendly stance during previous regulatory roles, Atkins’ appointment has generated cautious optimism among crypto advocates, who hope his tenure could usher in a more progressive regulatory approach. However, the SEC continues to tread carefully, weighing investor protection, market stability, and technological readiness.

The broader implications of these decisions are substantial. While international counterparts—including regulators in Canada, Switzerland, and parts of the European Union—have already greenlit in-kind redemptions and staking options in their crypto ETFs, the U.S. remains in a wait-and-see mode. This regulatory lag has led to concerns that the U.S. could lose its competitive edge in financial innovation.

A favorable ruling in June could catalyze a new wave of institutional adoption by making crypto ETF products more attractive to both retail and professional investors. Conversely, further delays or outright rejections could reinforce a fragmented global regulatory landscape, limiting U.S. participation in the fast-evolving digital asset ecosystem. For now, all eyes remain on the SEC’s forthcoming decisions and what they might signal for the future of crypto finance in America.