SEC Postpones Rulings on Ether ETF Staking and In-Kind Redemptions, Reflecting Ongoing Caution Toward Crypto Integration

The regulator has postponed two key rulings until June, extending the review period for proposals concerning staking in Ethereum ETFs and in-kind redemptions for crypto funds.

Apr 15, 2025 - 13:35

Apr 15, 2025 - 13:37

SEC Postpones Rulings on Ether ETF Staking and In-Kind Redemptions, Reflecting Ongoing Caution Toward Crypto Integration

The U.S. Securities and Exchange Commission (SEC) has postponed decisions on two significant proposals related to cryptocurrency exchange-traded funds (ETFs), extending the review period into June 2025.

Key Developments:

Grayscale's Ethereum Trust Staking Proposal: The SEC has delayed its decision on Grayscale's request to permit staking within its Ethereum Trust (ETHE) and Mini Ethereum Trust (ETH) until June 1, 2025. This proposal, initially filed on February 14, 2025, seeks to allow the funds to stake a portion of their Ethereum holdings, potentially offering yield to investors.
In-Kind Redemptions for ETFs: Similarly, the SEC has extended its review of proposals from VanEck and WisdomTree to allow in-kind creations and redemptions for their Bitcoin and Ethereum ETFs. The new deadline for these decisions is set for June 3, 2025. In-kind transactions involve exchanging ETF shares directly for the underlying assets, such as Bitcoin or Ethereum, rather than cash.

Regulatory Context:

While other jurisdictions like Canada and Europe have approved staking features in crypto ETFs, the SEC continues to approach these innovations cautiously. The recent appointment of Paul Atkins as SEC Chair, known for his pro-crypto stance, could influence future decisions. However, analysts like James Seyffart of Bloomberg Intelligence suggest that the SEC will proceed at its own pace, regardless of international developments.

Implications for the Crypto Market:

The SEC's delays highlight the ongoing regulatory uncertainty surrounding crypto ETFs in the United States. The decisions on staking and in-kind redemptions are pivotal for the evolution of crypto investment products, potentially affecting investor returns and the operational efficiency of these funds.

As the June deadlines approach, stakeholders in the crypto industry will be closely monitoring the SEC's actions, which could set significant precedents for the integration of cryptocurrency features into traditional financial instruments.