Nasdaq seeks to allow 'in-kind' redemptions for BlackRock's Bitcoin ETF

Nasdaq submits an SEC filing to allow in-kind transfers of BlackRock’s spot Bitcoin ETF, simplifying the process for authorized participants.

In a filing submitted to the U.S. Securities and Exchange Commission, Nasdaq proposed on behalf of BlackRock to amend certain conditions made in the initial proposal for the iShares Bitcoin (BTC) Trust that would “allow for in-kind transfers of the Trust’s Bitcoin.”

“The proposed in-kind transfer process will be an alternative to the Trust’s current cash creation and redemption process,” Nasdaq wrote in the document.

If the amendment gets approved, then IBIT investors that fall under the category of Authorized Participants will be able to exchange Bitcoin ETF shares for underlying assets instead of cash. These underlying assets can also include Bitcoin among others. Authorized participants are typically large corporations, not individual shareholders. In-kind redemption helps to maintain the ETF’s liquidity as it simplifies the process.

Bloomberg ETF analyst James Seyffart explained in a recent post that the process of trading ETFs will become more efficient because it is “way more streamlined with less steps and less parties involved.” He also takes a jab at the SEC when it operated under Gary Gensler for enforcing on-cash redemptions due to regulatory preferences.

“In my opinion the ETFs should have been allowed to do this from the get-go but the Dem [Democratic] SEC commissioners were against it,” said Seyffart.

Though this change may not mean much for individual investors, it does benefit IBIT’s investors a great deal. Aside from liquidity, Bitseeker Consulting chief architect Chris J. Terry said that in-kind redemptions can play a major role in tax efficiency because it can minimize capital gains distributions, which would in turn benefit shareholders.

As previously reported by crypto.news, BlackRock’s IBIT emerged on top out of the 12 Bitcoin ETFs with net inflows of $661.9 million on the first business day of Trump’s presidency. However, it has experienced a slowdown in inflows throughout the past week.

On Jan. 22, BlackRock’s IBIT added 6,470 BTC to its holdings, bringing the total to 563,134 BTC. BlackRock’s IBIT Bitcoin holdings are currently valued at $55.6 billion, based on current market prices.