The SEC is reviewing a proposal to change BlackRock’s iShares Bitcoin Trust redemption process from a cash-based model to in-kind redemptions. This would allow authorized participants to redeem ETF shares for Bitcoin directly, rather than selling Bitcoin for cash first.
The proposal, submitted by Nasdaq on behalf of BlackRock, aims to make transactions more efficient for institutions involved in the ETF market. However, retail investors would not be affected, as they cannot directly redeem ETF shares for Bitcoin.
When the SEC initially approved spot Bitcoin ETFs in January 2024, it required issuers like BlackRock to use a cash redemption model. This meant Bitcoin had to be sold and converted to cash before being distributed to investors. If approved, the in-kind model could help reduce costs and improve liquidity for institutional traders.
The SEC has opened a 21-day public comment period, after which it will decide whether to approve, reject, or further review the proposal.
Would this change make Bitcoin ETFs more efficient, or could it lead to new regulatory challenges? The SEC’s decision could have a lasting impact on the future of crypto ETFs.