Nasdaq Seeks SEC Approval for In-Kind Redemptions in BlackRock Bitcoin ETF
Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission (SEC) seeking approval for in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT), according to a filing made on Friday. This change would allow authorized participants (APs), typically large institutional investors, to exchange shares of the ETF directly for bitcoin (BTC) rather than using cash.
The move is expected to improve efficiency by enabling APs to better manage ETF shares, reacting more quickly to market demand without involving cash transactions. However, retail investors would not be eligible to participate in these in-kind transactions.
When the SEC approved spot bitcoin ETFs, including IBIT, in January 2024, it initially only allowed cash redemption instead of the direct bitcoin redemptions proposed now. This was a decision made during the tenure of former SEC Chairman Gary Gensler, who had expressed concerns about allowing brokers to handle actual bitcoin.
James Seyffart, an ETF analyst at Bloomberg Intelligence, commented on X, “This should have been approved from the beginning, but they didn’t want brokers interacting with actual Bitcoin for various reasons.”
Since its launch, IBIT has become the largest spot bitcoin ETF, attracting nearly $40 billion in inflows within its first year, setting a record for the most successful ETF debut in history. The proposed change could further enhance IBIT’s appeal to institutional investors by offering a more efficient structure for trading.
