Nasdaq has filed a proposal to amend the rules for BlackRock Bitcoin ETF, allowing for in-kind redemptions instead of cash, according to a Friday Form 19b-4 filing.
Nasdaq has filed a proposal to amend the rules for BlackRock Bitcoin ETF, allowing for in-kind redemptions instead of cash, according to a Friday Form 19b-4 filing.
| Key Takeaways: – Nasdaq filed to allow in-kind redemptions for BlackRock Bitcoin ETF, enabling institutional investors to create or redeem shares using Bitcoin instead of cash. – The proposed model eliminates broker fees and bid/ask spreads, streamlining the redemption process while reducing potential Bitcoin sales during redemption events. |
The shift would permit large institutional investors, known as authorized participants (APs), to create and redeem shares using Bitcoin directly rather than requiring cash transactions.
The in-kind redemption model is considered more efficient for exchange-traded funds (ETFs) as it eliminates the need to sell Bitcoin to raise cash, which typically incurs bid/ask spreads and broker fees. Instead, APs can closely monitor ETF demand and quickly adjust their positions without involving cash, streamlining the process. Retail investors, however, remain ineligible to participate directly in these transactions.
When the Securities and Exchange Commission (SEC) first approved spot Bitcoin ETFs, including BlackRock Bitcoin ETF, in January of last year, redemptions were limited to cash.
The SEC’s initial model required Bitcoin to be moved from storage, sold and converted to cash for redemption. While this approach provided participants with flexibility, it added complexity and potential market impact.
Bloomberg ETF analyst James Seyffart highlighted the benefits of the proposed rule change, noting that in-kind redemptions could reduce overall Bitcoin sales during ETF redemption events.
Seyffart also pointed to the SEC’s recent repeal of the controversial crypto accounting rule, SAB 121, as an enabling factor for this change. The repeal of SAB 121, which had discouraged banks from holding crypto assets, marks a significant shift in regulatory attitudes.
| Disclaimer: The information on this website is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are volatile, and investing involves risk. Always do your own research and consult a financial advisor. |
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