SEC Delays Decision on In-Kind Creations and Redemptions for BTC and ETH Spot ETFs Until June 3

According to a post from Eleanor Terrett on X, the SEC has decided to delay its decision to allow WisdomTreeFunds and VanEck to process in-kind creations and redemptions

The Securities and Exchange Commission (SEC) has decided to postpone its decision to allow WisdomTreeFunds and VanEck to process in-kind creations and redemptions for their BTC and ETH spot ETFs until June 3, according to a post by Eleanor Terrett on X.

In-kind creations and redemptions are a topic that has been discussed extensively, especially in relation to the recent approval of the first BTC spot ETFs.

Explaining what in-kind creation involves, Terrett wrote that it is exchanging the underlying assets (like Bitcoin and Ethereum) directly without the need to convert in and out of cash—a rule that the Gensler SEC enforced.

The regulator was against in-kind creations because they help people avoid taxable events, even though they also help maintain liquidity and price stability.

The SEC is still erring on the side of caution

Eleanor Terrett's post on X regarding the postponement drew attention and comments as netizens weighed in with their opinions and questions.

One user asked if retail investors would be able to avoid taxable events via in-kind. Terrett responded by pointing out that in-kind creations will primarily benefit issuers and authorized participants (APs), not retail investors.

The fact that the SEC is still postponing its decision on in-kind ETF redemptions is a subject that has sparked interest and drew several comments.

One user asked if retail investors would be able to avoid taxable events via in-kind, to which Terrett responded by saying that in-kind creations will primarily benefit issuers and APs, not retail investors. Another user stated that the SEC is moving slowly and keeping the crypto industry in suspense as they wait to see if the regulator will soften its stance or put out more red tape.

This approach, which was common under Gensler, is one of the things that had been hindering crypto innovation in America and people expected a different approach under Paul Atkins.

"Paul Atkins coming in and delaying things was not on my bingo card," one user wrote. Another added that the delay keeps the crypto industry on edge as they can't decide if the SEC will soften its stance or put out more red tape

Things may speed up when Paul

Atkins officially takes over

Some users on X seem to think that all these delays from the SEC have something to do with the new SEC head, Paul Atkins. Unlike Gensler, Atkins is bolder and actually seems interested in crypto innovation as opposed to regulation, so people expected that by now, the SEC would have done more to do things better for the industry.

However, some hours ago, Terrett clarified that Paul Atkins is yet to take his seat at the SEC.

"There are a few procedural steps before he can officially start including President Trump signing off on his appointment and the formal swearing-in," she added. This could happen any time over the next few days so stay tuned.

Terrett later clarified that Trump's 'sign-off' is "purely procedurally" and "essentially a ministerial function, just part of the standard paperwork process.