In a move closely watched by institutional investors and crypto asset managers, the U.S. Securities and Exchange Commission (SEC) has officially delayed its decision on the Bitwise crypto ETFs, specifically regarding the proposed allowance of in-kind redemptions for both spot Bitcoin and Ethereum funds.
This development, disclosed in a formal filing on July 16, 2025, signals a continued cautious stance by the SEC toward digital asset exchange-traded funds, despite growing demand from the financial sector for more flexible crypto investment vehicles.
What’s at Stake for Bitwise Crypto ETFs?
The focus of this delay is the Bitwise Bitcoin and Ethereum ETF proposals, submitted through NYSE Arca. The key point of contention revolves around the method of redemptions: in-kind (using the underlying crypto assets like BTC or ETH) versus in-cash (requiring liquidation into fiat before settlement).
Source: SEC’s official document
Bitwise seeks permission for in-kind redemptions, a model widely considered more tax-efficient and scalable—especially for large institutional clients. If approved, it could set a precedent for other issuers, potentially reshaping the ETF landscape for crypto.
However, the SEC’s extension of the review period suggests ongoing regulatory hesitancy. The agency stated it requires more time to evaluate the implications of in-kind redemptions on market manipulation risks, custody logistics, and investor protection standards.
The deadline for a final ruling has now been pushed to September 30, 2025, according to the SEC’s official document.
Why In-Kind Redemptions Matter
The debate over in-kind versus in-cash redemptions has become one of the most critical battlegrounds for crypto ETF structure in the U.S. market.
Under the in-kind model, ETF participants exchange shares directly for the underlying assets—Bitcoin or Ethereum—rather than liquidating them into cash. This process reduces taxable events and minimizes slippage, which is especially important in volatile crypto markets.
Traditional commodity ETFs, like those based on gold, often use in-kind methods to offer greater capital efficiency. Bitwise and other proponents argue that the same logic should apply to crypto assets, particularly as market infrastructure has matured to support secure transfers and institutional-grade custody.
Market Reaction and Industry Response
The SEC’s delay didn’t come as a total surprise to industry insiders. While many had hoped for faster approval following the greenlighting of several spot Bitcoin and Ethereum ETFs earlier this year, regulatory clarity around redemptions remains elusive.
A Bitwise spokesperson noted that the firm “remains committed to working with regulators to ensure investor safety and product efficiency.” Meanwhile, analysts at Bloomberg and Fidelity have reiterated that approval for in-kind models is likely inevitable, but will come in incremental steps.
Leading ETF strategist James Seyffart commented that “the in-kind redemption issue is the final frontier for crypto ETFs to reach full parity with traditional commodities.”
Broader Implications for Crypto ETFs
This delay has implications that extend far beyond Bitwise crypto ETFs. Several other ETF issuers—including BlackRock, Fidelity, and VanEck—are either waiting for similar decisions or are closely watching the outcome to adjust their own crypto fund strategies.
If the SEC eventually approves in-kind redemptions, it could unlock a new wave of ETF innovation, including multi-asset crypto funds and broader exposure products. Conversely, extended delays or rejections might drive issuers to relocate offerings to more crypto-friendly jurisdictions like Switzerland or Hong Kong.
For now, the U.S. remains at a regulatory crossroads.
Final Thoughts: Bitwise Crypto ETFs Await Pivotal SEC Ruling
As the clock ticks toward the new September deadline, the market is left in limbo. The outcome of this SEC review could determine whether crypto ETFs evolve into tax-optimized, scalable tools for institutional adoption—or remain bound by fiat-centric limitations. For Bitwise crypto ETFs, the stakes couldn’t be higher.
