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

Key Highlights:

The SEC has postponed decisions regarding in-kind redemptions for Bitwise and WisdomTree’s crypto ETFs.
A ruling on Grayscale’s plan to permit staking in its Ethereum Trusts has also been delayed.
Other jurisdictions like Hong Kong and Canada have already permitted these features.

The Securities and Exchange Commission (SEC) is not ready to announce decisions on two vital features that issuers of spot crypto exchange-traded funds (ETFs) are eager to implement.

The regulatory body has pushed back the timeframe for deciding whether to allow in-kind redemptions for WisdomTree’s Bitcoin Fund (BTCW) and VanEck’s Bitcoin Fund (BITB), as well as for its Ethereum Fund (ETHW). It also extended the deadline for a decision on a proposal by Grayscale concerning staking its Ethereum Trust (ETHE) and Mini Ethereum Trust (ETH).

Cboe, associated with five other issuers of an Ethereum ETF, such as Fidelity, Franklin Templeton, VanEck, and Invesco/Galaxy, submitted amended filings in March for the Fidelity Ethereum Fund (FETH) and the Franklin Ethereum ETF (EZET).

The SEC has yet to allow staking in spot ether ETFs. However, with the recent appointment of the new SEC Chair, Paul Atkins, confirmed by the Senate last week, rapid developments could occur.

Market Context:

Several markets, including those in Hong Kong and Canada, have authorized staking within ETFs, which does not pressurize the SEC as stated by some experts. James Seyffart, an ETF analyst at Bloomberg Intelligence, remarked:

“The SEC will take their time. They operate at their pace and are unlikely to hasten their process due to other jurisdictions’ approvals.”

The SEC needs to make decisions regarding the in-kind redemptions for Bitwise and WisdomTree’s products by June 3rd and will have until June 1st for a decision on Grayscale’s staking proposal.