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The US Securities and Exchange Commission (SEC) has delayed its decision on Bitwise’s proposal to permit in-kind redemptions for its Bitcoin and Ethereum exchange-traded funds (ETFs). The new deadline for a ruling is now set for September 8, 2025.
The filing, published on Wednesday, stated that the commission required additional time to consider the request. The new regulation would enable the creation or redemption of ETF shares using real crypto assets, rather than cash, which is similar to traditional commodity ETFs.
In-kind redemptions provides institutional investors a means of exchanging ETF shares for assets other than cash, such as cryptocurrency, Bitcoin, and Ethereum. This model's potential impact includes reducing slippage, enhancing efficiency, and minimizing taxable events for high-volume participants.
Bitwise’s proposed structure would allow authorized participants to deliver Bitcoin or Ethereum directly to the ETF issuer in exchange for newly issued shares. Conversely, shares could be redeemed to receive crypto assets, not cash. Such mechanisms already exist in many commodity-backed ETFs, such as those for gold.
The SEC cited the need for “sufficient time to consider the proposed rule change and the issues raised therein,” according to the official filing. Although the review extension was expected, it reflects regulators’ cautious stance despite broader political momentum supporting crypto innovation.
Bitwise is not the first issuer to want regulatory clarity on in-kind redemption. Other proposals by BlackRock, Fidelity, VanEck, WisdomTree, and 21Shares also seek to replicate the traditional ETF model to digital asset funds. On Tuesday, the SEC extended its review of the Ethereum ETF in-kind model proposed by BlackRock by shifting its deadline date to August 26.
The influx of applications coincides with a shift in regulatory tone under the current administration. President Donald Trump’s crypto-friendly policy environment has reshaped expectations, encouraging issuers to introduce more advanced fund mechanisms. Former SEC Commissioner Hester Peirce recently admitted that crypto ETF products “are definitely coming at some point,” implying long-term eventual regulatory support.
However, SEC officials continue to exercise caution amid concerns about asset security, systemic risk, and market manipulation. While political leadership and internal appointments, including the arrival of pro-crypto Chairman Paul Atkins, signal a softer approach, procedural delays indicate that approval will not be rushed.
Also Read: Why Investors Lose Money During Bitcoin Price Surges?
The upcoming September 8 deadline is critical. The SEC can accept the request, reject it, or even certify a further review. With a favorable ruling, extensive use of in-kind redemptions in crypto ETFs may be enabled. However, a delay or rejection can confirm regulatory cautions regardless of political changes.
Market participants are watching closely. Bitcoin recently traded at $118,900, while Ethereum reached $3,360, its highest level in five months. Bitwise’s proposal comes at a time of renewed momentum for digital assets and ETFs, with the industry awaiting signals on the path forward.
