BlackRock’s Ethereum ETF Play: SEC Filing for In-Kind Redemptions Signals Major ETH Validation

Wall Street’s $10 trillion gorilla just made its move—BlackRock filed with the SEC to allow in-kind redemptions for its spot Ethereum ETF. Here’s why it matters.

The mechanics: In-kind redemptions mean institutions can swap ETF shares for actual ETH (and vice versa) without dumping tokens on the open market. No forced sell pressure—just cleaner exposure.

The subtext: This isn’t some crypto fund manager playing regulatory hopscotch. When BlackRock structures products this way, it’s betting the SEC will eventually greenlight ETH as a non-security. Bullish doesn’t begin to cover it.

The cynical take: Nothing gets traditional finance moving like the scent of fresh fees—but hey, we’ll take the institutional validation. ETH’s supply just got tighter while Wall Street figures out custody (good luck with those gas fees, guys).

BlackRock S1 Amendment | James Seyffart For the uninitiated, in-kind redemptions represent a crucial feature for many institutions. Instead of redeeming ETF shares for cash, authorized participants would be able to directly exchange shares for the underlying asset, in this case, ethereum (ETH).  This model could reduce transaction costs, minimize taxable events, and may even lead to greater operational flexibility, all of which are especially beneficial in the crypto markets. BlackRock Also Wants to Include Staking in Its Ethereum ETF While this recent filing centers on redemption processes, BlackRock is also actively engaging the SEC on another pivotal issue: staking. According to internal discussions with the SEC’s Crypto Task Force, BlackRock is pushing for ETHA to include staking features.  Robert Mitchnick, the firm’s head of digital assets, has noted that staking is an important part of Ethereum’s investment appeal. Mitchnick argues that excluding staking from Ethereum ETFs overlooks a major portion of potential yield, and this limits the attractiveness of such products to investors. Although the SEC has not yet approved staking, the conversations are ongoing. Seyffart previously suggested in April 2025 that while early approval for staking is possible, the final decision is expected by late October, with interim milestones likely in May and August. BlackRock Ethereum ETF Performing Well Meanwhile, amid these regulatory developments, ETHA’s market performance continues to show momentum. According to Sosovalue, on May 9, 2025, the fund recorded $17.61 million in net inflows, making it the only Ethereum ETF among nine trading in the U.S. to post positive flows that day.  This followed a $21.77 million outflow on May 7 and zero flow on May 8. The two active trading days, May 7 and 9, marked the only sessions with movement last week, while the remaining days saw no net activity. Essentially, the ETF has amassed $15.94 million in net inflows for May so far. As of May 9, cumulative net inflows since the fund’s inception in July 2024 stood at $4.2 billion, with total net assets valued at $2.93 billion. Despite volatility in weekly flows, ETHA closed April with $108.19 million in net inflows.  Remarkably, since launch, the ETF has experienced only one month of net outflows, which occurred in March 2025 when it saw $200.81 million withdrawn.