The U.S. Securities and Exchange Commission (SEC) has deferred its decision regarding in-kind redemptions for two proposed cryptocurrency exchange-traded funds (ETFs).
A public document released by the SEC on Wednesday reveals the agency requires additional time to evaluate the possibility of allowing in-kind redemptions on the NYSE Arca exchange for Bitwise’s Bitcoin (BTC) and Ether (ETH) spot ETFs. While the ruling date is extended, the original timeframe remains the guidepost: “45 days, which can be extended to a maximum of 90 days.”
“The Commission deems it necessary to designate a longer period to act on the proposed rule change to ensure adequate time for comprehensive consideration of the proposal and related issues,” the official statement explains.
In-kind redemptions would enable ETF investors to redeem their shares directly for the underlying assets, specifically Bitcoin or Ether, in this instance.
This type of redemption could introduce specific tax considerations since assets would be transferred directly instead of being converted to cash.
Related: US regulator explores streamlined approval for crypto ETFs
SEC faces criticism over delays
This latest deadline extension aligns with a pattern of delayed decisions by the SEC regarding cryptocurrency matters. Earlier in the month, legal representatives for Grayscale, a digital asset management firm, challenged the SEC’s delay in approving its Digital Large Cap ETF listing.
While the SEC initially greenlit the product, the Office of the Secretary subsequently initiated a review, effectively suspending the decision. Grayscale’s lawyers contend that this action violated the established “approval or rejection deadline” and deviated from accepted procedures.
Related: First US staking ETF poised to launch, offering Solana exposure
A Shift in Regulatory Stance?
Despite these ongoing disputes, a widespread consensus exists that the SEC’s approach to cryptocurrencies has undergone a noticeable transformation since the current administration came into power and Paul Atkins replaced Gary Gensler as SEC Chair.
Earlier this month, Atkins stated that the SEC now views tokenization as a beneficial “innovation” deserving of encouragement. He also highlighted the departure from his predecessor’s tactics, emphasizing that the SEC had previously stifled progress through ambiguous regulations and “regulation through enforcement.” He added:
“That era has ended.”
Atkins affirmed that his objective concerning cryptocurrency regulations is to foster transparency and establish a foundation conducive to innovation and the development of new products.
Magazine: SEC’s Changing Crypto Course Raises Key Questions