The U.S. Securities and Exchange Commission (SEC) has once again put a hold on Fidelity’s request to implement ‘in-kind redemptions’ for its proposed spot Bitcoin (FBTC) and Ethereum (FETH) exchange-traded funds (ETFs). This would allow authorized participants to trade ETF shares directly for the underlying crypto assets, potentially lowering trading costs and reducing tax burdens for investors.
FTI is not alone in this pursuit; other major players like BlackRock, VanEck, and WisdomTree are also requesting similar redemption mechanisms in their cryptocurrency ETFs.
While the SEC has acknowledged these filings, including BlackRock’s request for its Ethereum ETF, they haven’t set a specific timeline for when they will make a final decision on Fidelity’s proposal.
This pause reflects a broader trend within the SEC. In April, they also delayed decisions on in-kind redemption requests from WisdomTree (for BTCW and ETHW funds) and VanEck’s Bitcoin Fund (BITB). At the same time, the SEC is still reviewing proposals related to Ethereum staking in ETFs, with updates expected in the coming months.
Industry experts anticipate the SEC might approve in-kind redemptions later this year. This would make these ETFs operate more efficiently and attract larger investors. As the SEC’s review continues, the cryptocurrency industry awaits further clarity on how these innovative financial products will be regulated.