BlackRock has submitted an amended S-1 filing to the U.S. SEC, proposing in-kind creation and redemption for its iShares Ethereum Trust ETF (ETHA). This move, first reported by Bloomberg analyst James Seyffart on May 9, 2025, signals a pivotal shift in how institutional investors might interact with Ethereum-based ETFs.
What Are In-Kind Redemptions?
In-kind redemptions allow authorized participants (APs) to exchange ETF shares directly for the underlying asset—here, Ethereum (ETH)—instead of cash. Key benefits include:
- Lower transaction costs (avoiding brokerage fees and bid-ask spreads).
- Tax efficiency (minimizing capital gains triggers).
- Operational flexibility (critical for crypto markets with liquidity constraints).
Analysts Seyffart and Eric Balchunas predict SEC approval for this model by 2025, aligning with ETHA’s final decision deadline of November 10, 2025.
Staking in Ethereum ETFs: BlackRock’s Push
BlackRock is also advocating for ETH staking within ETHA, arguing it’s central to Ethereum’s value proposition. According to internal SEC discussions:
- Robert Mitchnick, BlackRock’s Head of Digital Assets, emphasized staking’s role in generating yield for investors.
- The SEC hasn’t yet approved staking, but negotiations are ongoing. Seyffart projects a decision by late October 2025, with interim updates likely in May and August.
👉 Explore how ETH staking could reshape ETF yields
ETHA’s Market Performance
Despite regulatory uncertainties, ETHA continues attracting institutional interest:
- May 9, 2025: $17.61 million net inflows (sole positive flow among U.S. Ethereum ETFs).
- April 2025: $108.19 million net inflows.
- Lifetime stats: $4.2 billion cumulative inflows, $2.93 billion in net assets (as of May 9).
ETHA’s only net outflow month was March 2025 ($200.81 million), showcasing resilience amid crypto volatility.
FAQs
Q: How do in-kind redemptions benefit ETH investors?
A: They reduce costs and tax liabilities while improving liquidity by enabling direct ETH-for-shares exchanges.
Q: When might the SEC approve ETHA’s staking feature?
A: Likely by late October 2025, per Bloomberg analysts.
Q: Why is ETHA outperforming other Ethereum ETFs?
A: BlackRock’s institutional credibility and in-kind redemption proposal enhance investor confidence.