BlackRock Bitcoin ETF Could Enable In-Kind BTC Redemptions: Nasdaq Filing – Decrypt

BlackRock’s iShares Bitcoin Trust ETF could receive a significant update, per a Friday 19b-4 form filing from Nasdaq, which proposed a rule change to the exchange-traded fund that would enable in-kind BTC redemptions rather than just for cash.

Authorized participants, aka large institutional investors, would be able to redeem shares of the ETF for the underlying Bitcoin, rather than being forced to sell the Bitcoin via a market maker and deliver cash instead.

That’s the current status quo, as established when IBIT and other Bitcoin ETFs were approved for trading by the SEC in January 2024, when Joe Biden was president and the regulator was run by crypto skeptic Gary Gensler.

But things are changing under the newly inaugurated President Donald Trump, including the departure of Gensler and the creation of an SEC crypto task force that appears focused on creating clear regulation for the industry.

On Thursday, the SEC rescinded the controversial crypto accounting rule, called SAB 121, which discouraged banks from taking custody of crypto.

But this new rule would significantly streamline the process of redemptions, according to Bloomberg ETF analyst James Seyffart, with fewer steps and fewer parties needed to complete a redemption. And without a requirement to redeem for cash, there could be less selling of Bitcoin overall when ETFs are hit with redemption requests.

Wow. Way too many questions and this stuff goes pretty deep in the weeds. So i’ll keep it high level and answer “What does this mean?”

Not all that much for individual retail investors. Mostly what it means is that ETFs should trade even more efficiently than they already do… pic.twitter.com/LWYsKmo5sH

— James Seyffart (@JSeyff) January 24, 2025

In a post reply on X, Seyffart pointed to the SAB 121 repeal as a key part of the equation in the proposed ETF rule change.

“The side effects from abolishing SAB 121 are likely only just beginning,” he suggested.

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