SEC Delays Bitwise ETF Decision to September 2025

The U.S. Securities and Exchange Commission (SEC) has once again postponed its decision on Bitwise’s proposal to allow in-kind redemptions for its Bitcoin and Ethereum ETFs. The new decision deadline is now set for September 8, 2025. This delay keeps investors and ETF issuers in suspense as Bitwise seeks regulatory approval for a model that could improve fund efficiency and reduce tax liabilities.

In traditional finance, in-kind redemptions allow ETF shareholders to exchange their fund shares for the underlying assets instead of cash. Bitwise aims to bring this structure to its Bitcoin and Ethereum ETFs, enabling institutional investors to redeem ETF shares directly for cryptocurrency. Such a setup can minimize tax consequences and lower transaction costs, offering a more efficient and investor-friendly model than the current cash-based system. This method is especially beneficial in the volatile crypto market, where direct asset transfers are often preferable to fiat conversions, which can incur higher fees and delays.

While no specific reason was given for the delay, the SEC stated it needs more time to evaluate Bitwise’s proposal. The agency has historically been cautious with crypto-related products, especially when they involve novel mechanisms like in-kind transactions. A green light from the SEC would mark a major milestone not just for Bitwise but for the broader crypto ETF ecosystem. It could encourage other ETF issuers to follow suit, paving the way for more flexible and tax-efficient crypto investment vehicles in the U.S. market.

The SEC's decision to extend the timeline reflects its cautious approach, even as the political environment for cryptocurrencies has shown signs of improvement. The latest delay comes amidst a surge in applications from asset managers for various crypto-related ETFs. Additionally, requests to add features like staking to existing funds have piled up. This influx of applications coincides with a shift in regulatory stance under the current administration, which has been more favorable towards the crypto industry compared to its predecessor.

Despite the appointment of pro-crypto officials and the removal of digital asset skeptics from its ranks, the SEC continues to exercise caution in its dealings with crypto-based investment proposals. This is evident in its recent actions, such as putting Grayscale’s multi-token ETF under review and delaying decisions on spot Solana ETFs. The SEC's approach underscores its commitment to thorough evaluation, ensuring that any approved ETFs meet stringent regulatory standards.

The delay in decision-making on in-kind redemptions for Bitwise's ETFs is part of a broader trend of regulatory scrutiny in the crypto space. As the industry evolves, regulators are taking a measured approach to ensure that investor protections are maintained while fostering innovation. The outcome of the SEC's review will have significant implications for the crypto ETF market, potentially paving the way for more sophisticated investment products or reinforcing existing regulatory barriers.