In-Kind Redemption Feature Added to BlackRock Spot Bitcoin ETF by Nasdaq.

Nasdaq Petitions SEC to Introduce In-Kind Redemptions for BlackRock Spot Bitcoin ETF

In a move to enhance operational efficiency, Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to implement in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT). This mechanism allows institutional investors, known as authorized participants (APs), to directly exchange ETF shares for bitcoin (BTC), eliminating the need for cash transactions.

The approach is designed to streamline ETF management by enabling APs to swiftly balance supply and demand without cash limitations. Retail investors, however, remain excluded from participating in this process.

Spot bitcoin ETFs, including IBIT, were approved by the SEC in January 2024, but the initial authorization allowed only cash-based redemptions. The SEC cited concerns about brokers managing bitcoin directly as a primary reason for this restriction.

“It’s about time,” Bloomberg ETF analyst James Seyffart remarked on X. “This approval should’ve been granted initially, but SEC leadership opted for stricter control.”

Since its debut, BlackRock’s IBIT has dominated the market, amassing nearly $40 billion in inflows and setting a new standard for ETF success. The proposed shift to in-kind redemptions could further solidify its position as a cornerstone for institutional bitcoin investment.