- SEC delays decision on crypto ETF in-kind processes, extending the timeline to June 3, 2025, for WisdomTree and VanEck applications.
- In-kind transactions reduce taxable events and improve ETF market function but benefit only issuers and authorized participants, not retail investors.
- Despite a change in leadership, the SEC’s approach to digital asset ETF mechanisms remains cautious and largely unchanged from previous years.
The United States Securities and Exchange Commission has pushed back its decision on allowing WisdomTree and VanEck to implement in-kind creation and redemption mechanisms for their spot Bitcoin and Ethereum exchange-traded funds. The new date for review has been set for June 3, 2025.
The institution continues to adopt a protective stance regarding digital asset Exchange-Traded Funds (ETFs). Under the in-kind process, investors exchange Bitcoin and Ethereum directly instead of cash transactions. Marketing ETFs with in-kind processes appeals to issuers and authorized participants because it reduces taxation while improving the market stability and liquidity of such products.
Impact limited to select parties
Although in-kind transactions offer tax advantages and operational efficiency, they primarily benefit ETF issuers and authorized participants. Retail investors are not expected to gain direct tax relief through this mechanism. Market participants had hoped that under new leadership, the SEC would take a more flexible approach to digital asset regulation.
The delay mirrors the position previously maintained by the SEC under Chairman Gary Gensler, who favored cash-based systems over in-kind models for crypto products. Critics argue that this preference discourages market innovation and affects ETF efficiency. Despite expectations for policy shifts under the incoming SEC leadership, delays have persisted.
Leadership transition underway
Some observers have linked the timing of the delay to the transition of SEC leadership. Paul Atkins, the new incoming chairman, is still awaiting the formal conclusion of procedural steps before officially assuming the role. Sources confirm that this process includes a sign-off from President Trump, which is expected soon.
Online reactions suggest frustration within the crypto community. Users noted that the industry remains uncertain about regulatory outcomes. Eleanor Terrett, who first reported the delay, clarified that procedural delays are still ongoing and that decisions could shift once the leadership transition is finalized.
