SEC Delays Staking, In-Kind Crypto ETF Decisions

BlackRock has filed to add staking capabilities to its iShares Ethereum Trust, seeking to let the ETF earn rewards by validating Ethereum transactions, which could make it the first U.S. Ethereum ETF with this feature if approved. Nasdaq has submitted an amended filing to the SEC to support this, and other asset managers such as Grayscale, Franklin Templeton, and Fidelity have expressed similar intentions. The SEC has delayed decisions on both staking and in-kind redemption proposals for these and other crypto ETFs, including those from Bitwise, 21Shares, WisdomTree, and VanEck, citing the need for further review of operational and regulatory risks. In-kind redemptions would allow investors to exchange ETF shares directly for underlying crypto assets, potentially enhancing efficiency and reducing tax burdens. Industry experts and SEC Commissioner Hester Peirce remain optimistic about eventual approval of these innovations. The SEC’s decisions on these proposals are expected to significantly shape the future of crypto ETFs in the U.S.