Nasdaq has filed an amended rule on behalf of BlackRock to enable in-kind redemptions for its iShares Bitcoin Trust, a potential shift from the cash-based redemption model initially approved by the SEC. The amendment, detailed in a Form 19b-4 filing, would allow authorized participants to exchange Bitcoin directly with the Trust rather than requiring the sale of Bitcoin for cash during redemption or creation processes.
The proposed in-kind model is expected to streamline ETF operations, reducing inefficiencies tied to moving and liquidating Bitcoin, as required under the existing cash model. This approach could enhance the ETF’s trading efficiency, though individual investors will still be restricted from engaging in direct Bitcoin transfers; the process will be limited to authorized participants.
ETF analyst James Seyffart highlighted the advantages of the proposed change, noting that in-kind transfers could make ETF trading more efficient. He also suggested that such a mechanism might have been allowed earlier if not for opposition from certain SEC commissioners.
This development reflects ongoing refinements in the operation of spot Bitcoin ETFs as asset managers and regulators seek to optimize the balance between investor accessibility and operational practicality. As the SEC evaluates this proposal, its decision could have broader implications for the structure and efficiency of Bitcoin ETFs across the market.