- The SEC is reviewing a proposed rule to allow in-kind redemptions for the WisdomTree Bitcoin ETF, signaling a possible shift toward more crypto-native fund structures.
- Meanwhile, internal conflict has erupted over new staking guidance, highlighting deep divisions within the agency and growing uncertainty in U.S. crypto regulation.
SEC Invites Public Comment on Bitcoin ETF In-Kind Redemptions
The U.S. Securities and Exchange Commission (SEC) has opened a formal review process into a proposed rule change that could allow in-kind creations and redemptions for the WisdomTree Bitcoin Fund (BTCW). The request for public input marks a pivotal moment for crypto ETFs, potentially setting the stage for more crypto-native operational structures.
Currently, BTCW and other spot Bitcoin ETFs operate under cash redemption models, where investors receive fiat currency rather than Bitcoin upon share redemption. If approved, in-kind redemptions would allow investors to directly receive Bitcoin—mirroring traditional commodity ETF mechanics. Proponents argue this model improves tax efficiency, reduces transaction costs, and aligns more closely with decentralized finance principles.
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The SEC is now accepting public comments for 21 days, providing a rare opportunity for stakeholders to influence the regulatory future of crypto ETF products.
Internal Clash Over Crypto Staking Guidance
While reviewing ETF mechanics, the SEC has also sparked controversy with new staking guidance issued on May 29. The updated position suggests that some staking offerings may not qualify as securities—a notable departure from previous enforcement actions.
The internal response was swift and divided. Commissioner Caroline Crenshaw issued a dissenting opinion, warning the new stance contradicts established legal precedent and recent court rulings involving Binance and Coinbase. In contrast, Commissioner Hester Peirce defended the guidance, advocating for case-by-case regulation and greater flexibility in assessing staking services.
Critics, including former SEC enforcement chief John Reed Stark, labeled the shift a “betrayal” of investor protection, pointing to growing inconsistencies in the agency’s crypto policy.
A Divided Agency, A Murky Regulatory Future
The developments underscore growing tensions within the SEC and the broader regulatory uncertainty facing the crypto industry. While the agency appears open to modernizing ETF structures, its guidance on staking has reignited debate over token classification and investor protections.
With public trust and legal clarity at stake, the SEC’s decisions in the coming weeks—both on ETF redemptions and staking oversight—could shape the trajectory of U.S. crypto regulation for years to come.