SEC Kicks the Can Again: Bitwise’s In-Kind ETF Redemptions Left in Regulatory Limbo

The SEC just hit snooze on Bitwise's ETF redemption proposal—because why make decisions today when you can delay until 2026?

Another day, another deferral from America's favorite financial gatekeepers. The SEC's latest punt leaves crypto investors wondering if in-kind redemptions will ever get the green light.

Meanwhile, Wall Street's old guard ETFs keep raking in fees while innovators play regulatory whack-a-mole. Some things never change.

What’s at Stake

In‑kind redemptions may sound technical, but the idea is pretty simple. It would let large investors trade ETF shares for the actual assets underneath, like Bitcoin or Ether, instead of receiving the cash value. It’s a standard feature in traditional commodity ETFs, and crypto asset managers want the same flexibility. The appeal is lower tax impact, smoother trading, and better efficiency, especially for institutional players moving big volumes.

It’s Not an Actual Rejection, More Time is Needed

This is not the SEC slamming the brakes. It’s more like keeping the car in neutral while they check the map again. The initial 90‑day clock ran out, and the agency filed for an extension to continue reviewing the proposed rule change. The delay signals they’re not rushing, but they’re not closing the door either.

Eyes on the Bigger Players

Bitwise isn’t the only name pushing for in‑kind redemptions. BlackRock, VanEck, Fidelity, and 21Shares are all in the ETF race, and many of them are expected to follow suit with similar requests. Commissioner Hester Peirce has said the idea makes sense if it’s handled properly. That “if” is doing a lot of work here. The SEC wants to make sure this doesn’t turn into a backdoor for unregulated crypto exposure or systemic risk.

September Will Be Telling

Come September 8, the SEC has options. It can approve the change, deny it, ask for more information, or open it up for another round of public comments. What it decides could shape the direction of crypto ETFs for years. If Bitwise gets the green light, expect a wave of copycat requests. If not, it could signal a more cautious stance going forward.

What’s in the Bigger Picture?

Even though this is a delay, it comes in the middle of growing acceptance of crypto ETFs. Spot Bitcoin ETFs are gaining traction. Ethereum ETFs are waiting in the wings. And for the first time in years, the SEC seems more open to structured innovation. The tone is different now, even if the pace is slow. Investors are watching closely, not just for Bitwise, but for what this means for the rest of the industry.

The Bottom Line

The SEC isn’t saying no. It’s saying not yet. That’s a small but important difference. In‑kind redemptions WOULD make crypto ETFs feel a lot more like traditional ones. That’s good news for institutions looking to move size without extra friction. Whether it happens in September or not, the direction of travel looks clear. This is part of a bigger story, and the next chapter lands in just a few weeks.

Another delay from the SEC — crypto ETF decisions moving at snail paceNext stop: Sept 8.

— The Bakchod Bro(@thebackchodbro) July 17, 2025

Key Takeaways

• The SEC delayed its decision on Bitwise’s in-kind redemption request, setting a new review deadline of September 8.
• In-kind redemptions would allow large investors to swap ETF shares for crypto instead of cash, improving tax efficiency and liquidity.
• The delay is not a rejection, but a sign that the SEC is proceeding cautiously while evaluating potential risks and regulatory gaps.
• Other major firms like BlackRock, VanEck, and Fidelity are expected to file similar in-kind requests as crypto ETFs continue to evolve.
• The SEC’s decision in September could shape how crypto ETFs operate and whether they become more aligned with traditional ETF structures.