The Securities and Exchange Commission (SEC) currently finds itself in a position of careful consideration regarding pivotal features sought by issuers of spot crypto exchange-traded funds (ETFs). Recently, the regulator opted to delay its decision concerning the inclusion of in-kind redemptions for notable products such as WisdomTree’s Bitcoin Fund (BTCW) and VanEck’s Bitcoin Fund (BITB) and Ethereum Fund (ETHW).
In a significant move, the SEC also extended its decision deadline regarding a proposal from Grayscale to permit the staking of its Ethereum Trust (ETHE) and Mini Ethereum Trust (ETH). This proposal had been submitted to the SEC in February by NYSE Arca, Grayscale’s associated exchange.
Cboe, which is connected to several other issuers of ether ETFs—including Fidelity, Franklin Templeton, VanEck, and Invesco/Galaxy—has continued to push for advancements in the sector, submitting an amended filing in March for the Fidelity Ethereum Fund (FETH) and the Franklin Ethereum ETF (EZET).
Historically, the SEC has refrained from endorsing staking in spot ether ETFs. However, with the recent confirmation of Paul Atkins as the new SEC Chair, the landscape may be poised for change.
In contrast to the SEC’s cautious approach, other jurisdictions, including Hong Kong, Canada, and Europe, have already sanctioned staking for ETFs. Experts weigh in on the implications of this disparity. “The SEC will take its time and move as fast or as slow as they want,” remarked James Seyffart, an ETF analyst at Bloomberg Intelligence. “In my experience, they don’t care what other regulators are doing; while they might learn from others, an endorsement from another regulator will not pressure the SEC into hastily adjusting its policies. They will proceed at their own pace.”
Looking ahead, the SEC has until June 3rd to finalize its decision regarding in-kind redemptions for Bitwise’s and WisdomTree’s products, and a deadline of June 1st to announce its stance on Grayscale’s staking proposal. As the sector awaits these critical decisions, the ramifications for the crypto ETF landscape hang in the balance.
