Nasdaq has submitted a filing to the U.S. Securities and Exchange Commission (SEC) on behalf of asset manager BlackRock, requesting approval for a rule change that would allow in-kind creation and redemption for its spot Bitcoin exchange-traded fund (ETF). This move aims to make the BlackRock iShares Bitcoin Trust (IBIT) more efficient and transparent.
James Seyffart, a Bloomberg ETF analyst, highlighted the significance of this change in a Jan. 24 X post, noting that BlackRock “should have been allowed to do this from the get-go” when the IBIT launched in January 2024. The proposed change would enable Authorized Participants—institutions responsible for facilitating the creation and redemption of fund shares—to use either cash or Bitcoin for these processes. This model would bypass the usual bid/ask spreads and broker commissions, offering a more efficient way for the fund to operate.
NEW: BlackRock/iShares just filed to allow in-kind creation and redemption on their Bitcoin ETF $IBIT pic.twitter.com/Hy0tIEK81h
— James Seyffart (@JSeyff) January 24, 2025
While the in-kind creation and redemption model is beneficial for Authorized Participants, individual investors will not have access to this feature and must continue using the cash model. This distinction has sparked confusion among some investors, with crypto analyst MartyParty explaining that the change will provide “more transparency and onchain record of flows.”
Bitseeker Consulting’s Chris J Terry emphasized that in-kind redemptions would enhance the liquidity of the ETF, benefiting institutional participants rather than retail investors. Additionally, the introduction of in-kind redemptions would increase tax efficiency for ETFs, minimizing capital gains distributions, a crucial advantage for long-term investors.
Since its launch, IBIT has seen substantial success, becoming the largest spot Bitcoin ETF in the U.S. with $39.57 billion in inflows as of January 2024. The filing coincided with multiple other crypto ETF applications, including new filings for Litecoin (LTC) and XRP (XRP) ETFs, signaling continued interest in cryptocurrency-based investment vehicles.
Also Read: Litecoin (LTC) Surges 12% as Nasdaq Files for ETF Listing: Is This the Start of a Bullish Run?
With this proposal, BlackRock aims to further streamline the operation of its Bitcoin ETF, improving liquidity, tax efficiency, and market efficiency, positioning IBIT as a key player in the growing crypto ETF landscape.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
