Fidelity, BlackRock, and 21Shares Lead Efforts to SEC for In-Kind Crypto ETF Reform
@Roy, this matter is related to regulation and the SEC's evolving stance on in-kind redemptions for crypto ETFs, so I’m assigning it to you.
Key Event: On July 22, 2025, several major financial firms, including Fidelity, 21Shares, WisdomTree, and others, filed amendments with the SEC to enable in-kind redemptions for spot Bitcoin and Ethereum ETFs. This development signals "positive movement" at the regulatory agency, potentially paving the way for broader adoption of these financial products. SEC Commissioner Hester Peirce previously hinted at the likelihood of such redemptions, marking a significant step in the maturation of crypto ETFs.
Financial Giants Push for In-Kind Redemptions for Crypto ETFs, Signaling Regulatory Progress
Washington D.C. - A cohort of prominent financial firms, including Fidelity, 21Shares, and WisdomTree, submitted amended proposals to the U.S. Securities and Exchange Commission (SEC) on July 22, 2025, to enable in-kind redemptions for their spot Bitcoin and Ethereum exchange-traded funds (ETFs). This move is being interpreted by market analysts as a significant and positive step forward in the maturation of cryptocurrency-based investment products.
The filings aim to allow for the direct exchange of ETF shares for the underlying digital assets, a feature common in traditional ETFs that offers greater tax efficiency and potentially lower costs for investors. Currently, crypto ETFs in the U.S. are limited to cash redemptions, which can trigger capital gains taxes.
This development aligns with recent optimistic remarks from SEC Commissioner Hester Peirce, who has been a vocal supporter of a more innovation-friendly regulatory approach. Peirce has previously stated that in-kind redemptions for crypto ETFs are "on the horizon" and "definitely coming at some point." While she has emphasized that the regulatory process needs to be thorough, her comments have fueled industry optimism.
The push for in-kind redemptions comes amidst a series of delays from the SEC on similar proposals from other asset managers. The commission has postponed its decisions on in-kind redemption requests for Bitwise's Bitcoin and Ethereum ETFs until September 2025, citing the need for sufficient time to review the proposed rule changes. Similar delays have affected filings from BlackRock and Fidelity.
Despite the postponements, the wave of filings from major players like Fidelity, 21Shares, and WisdomTree underscores the industry's persistent effort to align crypto ETFs with their traditional counterparts. This push is happening in what some perceive as a more crypto-friendly regulatory environment.
The potential approval of in-kind redemptions is seen as a crucial step for the broader adoption of crypto ETFs. It would not only enhance their operational efficiency but also make them more attractive to a wider range of investors.
In the backdrop of these regulatory developments, the market for crypto ETFs continues to evolve. Recently, spot Ethereum ETFs have seen a significant surge in inflows, while spot Bitcoin ETFs have experienced some outflows, suggesting a rotation of capital within the digital asset space. On the one-year anniversary of their launch, spot Ethereum ETFs have attracted a total of $7.5 billion in inflows.
Roy, for your article, focus sharply on the core event: the amended proposals submitted by Fidelity, 21Shares, and WisdomTree on enabling in-kind redemptions for crypto ETFs. Start by explaining what in-kind redemptions are and why they matter—how they improve tax efficiency and lower costs compared to cash redemptions. Then, contextualize the significance of this regulatory push, tying it to Commissioner Peirce’s supportive comments and recent industry optimism. Avoid overloading the piece with general or additional background on previous delays; keep it tight and focused on the progress this signals. Directly connect this development to the growing maturity and adoption of crypto ETFs. End with insights on what the approval could mean for investors and the broader crypto market trajectory. Keep the tone clear and analytical.
Headline: Fidelity and 21Shares Lead Efforts to SEC for In-Kind Crypto ETF Reform
Summary:
- ETF filings move closer to SEC green light for crypto redemption flexibility.
- Progress on crypto ETF regulation boosts market confidence and investor efficiency.
On July 22, 2025, CoinDesk reported that financial powerhouses Fidelity, 21Shares, and WisdomTree have filed amended proposals with the U.S. Securities and Exchange Commission (SEC) to permit in-kind redemptions for their spot Bitcoin and Ethereum exchange-traded funds (ETFs). This enhancement would enable investors to exchange ETF shares directly for underlying cryptocurrencies, mirroring a key feature of traditional ETFs that enhances tax efficiency and minimizes costs.
Current U.S.-regulated crypto ETFs are restricted to cash redemptions, often triggering taxable events for investors. By bridging this gap, the proposed changes aim to better align crypto ETFs with conventional ETF structures, bolstering their attractiveness. Highlighting this momentum, SEC Commissioner Hester Peirce has previously expressed support for in-kind redemption mechanisms, calling them a likely evolution in the regulatory approach to crypto-based financial products.
Despite ongoing delays by the SEC—including decisions on related proposals from firms like Bitwise postponed to September 2025—industry leaders remain steadfast. The filings represent the sector’s commitment to developing progressive products that improve investor accessibility and operational efficiency. Clarity on such regulatory issues is broadly viewed as a crucial milestone toward mainstream adoption and the maturation of cryptocurrency investment vehicles.
Market trends further underscore this growing shift. On the first anniversary of spot Ethereum ETFs, inflows amounted to $7.5 billion, demonstrating notable investor interest. However, Bitcoin ETFs have recently faced outflows, potentially signaling changing preferences within the crypto investment landscape.
As of July 22, 2025, 19:10 UTC, Bitcoin (BTC) trades at $119,839.04, reflecting a 2.04% increase in 24-hour trading volume. Meanwhile, Ethereum (ETH) prices stand at $3,711.88, with a 1.36% decline during the same period.
