The U.S. Securities and Exchange Commission (SEC) has extended its deadline for deciding on Ethereum (ETH) exchange-traded funds (ETFs) staking and in-kind redemption applications to June 2025. This delay, which primarily concerns Grayscale’s spot Ethereum ETFs, has kept the crypto market and investors in suspense, particularly as the outcome of these decisions could influence Ethereum’s price and its broader market appeal. The SEC’s latest move adds a layer of uncertainty, but it also signals that more time is needed to understand the implications of these financial products.

Why the Delay?

The decision to delay the ruling on ETH staking and in-kind redemption applications stems from the SEC’s need for further discussions. As part of their review process, the agency has sought more time to meet with key stakeholders involved in Ethereum-related ETFs, including the prominent asset management firm BlackRock. The regulator is focusing on two key areas in these applications: staking for Ethereum ETFs and the concept of in-kind redemption, both of which are central to how these funds would operate in the market.

Grayscale’s application for staking provisions was submitted in February, and the SEC has now pushed the decision date back to June 1, 2025. In the same vein, other firms like Bitwise, VanEck, 21Shares, Fidelity, Invesco Galaxy, and Franklin Templeton have also filed similar applications. These firms are awaiting approval for staking provisions within their respective Ethereum ETFs. However, as of now, BlackRock has not filed for the same provisions, although Robert Mitchnick, BlackRock’s head of digital assets, has openly acknowledged the benefits of staking for these funds.

What Are In-Kind Redemptions?

In-kind redemptions are a key element in the SEC’s review process, particularly for Ethereum and Bitcoin ETFs. In contrast to the current cash settlement model, where ETF shares are exchanged for cash, in-kind redemptions allow investors to redeem ETF shares for the actual underlying assets—such as ETH or BTC—thus avoiding taxable events. This method has gained significant attention for its potential to enhance liquidity and reduce tax burdens for investors, making it an appealing option for crypto ETFs.

In-kind redemption is seen as an essential innovation for crypto-backed ETFs, and its delay could impact the overall attractiveness of Ethereum ETFs. The SEC has now extended the deadline for deciding on in-kind redemption for both ETH and BTC ETFs until June 3, 2025. This provides more time for regulators to assess whether this approach aligns with the broader goals of the securities market and investor protection.

The Broader Impact on Ethereum

The delay from the SEC has been met with mixed reactions in the market. While the regulatory body continues to seek clarity on the matter, there has been little immediate change in Ethereum’s speculative interest. Data from Coinglass shows that Ethereum’s Open Interest (OI) has been on the decline since February, dropping from nearly $26 billion to just below $20 billion. This suggests that despite the anticipation surrounding the potential approval of ETH ETFs, bearish sentiment is still prevalent, with investors becoming more cautious.

The ongoing uncertainty about Ethereum ETFs and their associated staking and redemption provisions may have contributed to this decline in OI. However, many market analysts believe that if the SEC gives the green light for Ethereum ETF staking and in-kind redemption in the coming months, it could provide a major boost for ETH, leading to renewed interest and a surge in price.

Ethereum’s Price Action and Bearish Sentiment

On the technical side, Ethereum’s price chart has been showing signs of bearish momentum. The ETH/USDT pair has formed a bearish rising wedge pattern, which could signal a potential decline in the near future. If this pattern plays out, Ethereum could see a pullback to below the $1,500 mark, reversing its current bullish trends. However, the $1,500 level remains a critical support zone. If Ethereum is able to reclaim the $1,800 mark, it could pave the way for a stronger rally, as the bulls would have regained control of the market.

Ethereum’s price performance will likely remain heavily influenced by the SEC’s final decisions in June. If the SEC approves the staking provisions and in-kind redemption for Ethereum ETFs, this could inject new confidence into the market, driving ETH’s price upward. Conversely, if the delay continues beyond June or the applications are rejected, Ethereum could face more downward pressure as investors seek alternative opportunities.

What’s Next for Ethereum ETFs?

With June 2025 marking a crucial deadline, all eyes are on the SEC’s next steps regarding Ethereum ETF staking and in-kind redemption. The SEC’s ongoing discussions with stakeholders, such as BlackRock and other industry leaders, will likely play a pivotal role in shaping the future of Ethereum in traditional financial markets.

For Ethereum investors, these developments represent a significant opportunity, but also a risk, given the ongoing regulatory uncertainties. The next few months could determine whether Ethereum ETFs become a mainstream product that allows institutional and retail investors easier access to Ethereum’s price movements or if regulatory roadblocks continue to hinder their development.

In summary, June 2025 is set to be a critical moment for Ethereum and its ETF prospects. As the SEC deliberates on these complex issues, investors should keep a close watch on the regulatory landscape, as any decisions made in June could be a catalyst for Ethereum’s future growth or lead to further market volatility.