SEC Delays BlackRock Ethereum ETF In-Kind Decision

The Securities and Exchange Commission extended its deadline to Aug. 26 on BlackRock's request to allow in-kind redemptions for its iShares Ethereum Trust (ETHA), using the maximum 90-day review period just days before the original deadline, according to a recent filing.

The SEC pushed back its ruling on the Nasdaq Stock Market proposal that would permit the Ethereum ETF to exchange shares directly for Ether instead of cash, according to a July 9 filing. The original 45-day deadline would have expired July 12.

In-kind redemptions are standard in traditional ETFs, allowing large investors to trade shares directly for underlying assets without converting to cash. This reduces costs and tax implications while improving market efficiency. The feature remains unavailable for all U.S. crypto ETFs despite multiple requests from major issuers.

Read More: What Is the ETF Creation/Redemption Mechanism?

The postponement leaves multiple major asset managers waiting for approval to add features that could make their funds more efficient and attractive to institutional investors.

Multiple Firms Affected

The SEC said it needs "sufficient time to consider the proposed rule change and the issues raised therein," according to the filing. BlackRock filed an amendment on July 1 that superseded its original May 9 request and focused solely on in-kind redemptions, the filing shows.

Other fund managers, including 21Shares, Fidelity Investments, WisdomTree, Bitwise and VanEck, have also filed to enable in-kind creation and redemption for their crypto ETFs. In April, the SEC delayed decisions on similar requests from WisdomTree and VanEck.

The regulatory agency also postponed a decision on Fidelity's request for in-kind redemptions for both its Bitcoin and Ethereum ETFs—the Fidelity Wise Origin Bitcoin Fund (FBTC) and the Fidelity Ethereum Fund (FETH)—in May. The SEC has not provided specific timelines for any of these decisions.

SEC Commissioner Hester Peirce has previously said that in-kind creations and redemptions for crypto ETFs are "definitely coming at some point." Bloomberg Intelligence Analyst James Seyffart wrote in a May X post that he expects "SEC approval for in-kind at some point this year."

The delays come as new SEC Chair Paul Atkins takes office following Senate confirmation, potentially bringing fresh perspectives to crypto ETF policies. The SEC recently clarified that "protocol staking activities" do not qualify as securities offerings under federal law.