Nasdaq has submitted a rule modification to the Securities and Exchange Commission (SEC) to permit in-kind redemption for BlackRock’s iShares Bitcoin Trust (IBIT).
BlackRock, an American investment management company, is advocating for a novel redemption mechanism for its ETF product, the iShares Bitcoin Trust (IBIT).
The Nasdaq Stock Market LLC, its trading venue, has submitted an application to the United States Securities and Exchange Commission (SEC) for the in-kind redemption model. This is particularly noteworthy.
The process enables substantial institutional investors to purchase and redeem shares of the fund directly in Bitcoin (BTC). It enables APs to closely monitor the demand for the ETF and respond promptly by purchasing or selling shares of the fund without the involvement of currency. Participation is not permissible for retail investors.
The objective of the proposal is to enable participants who are specifically qualified or authorized to transmit the trust’s Bitcoin holdings.
The approval of this rule change will allow authorized participants to redeem their proceeds in Bitcoin (BTC) rather than cash. However, the issuers made compromises in the lead-up to last year’s approval, as the Gary Gensler-led SEC preferred a cash creation model, despite the fact that the in-kind model is suitable for the majority of exchange-traded fund products.
Bloomberg Senior ETF Analyst James Seyffart described the implications for the market, stating that it will have minimal impact on retail traders. He stated that the Bitcoin ETF market will trade more efficiently as a result of in-kind redemption.
BlackRock is the world’s largest issuer of Bitcoin ETFs, and its IBIT holdings have already surpassed $60 billion. According to the most recent data, Farside Investors’ data indicates that inflows totaled $661.9 million on January 21, $344.3 million on January 22, and $154.6 million on January 23, respectively.
IBIT’s positive trading milestone continued through January 24. It recorded trading volumes exceeding $2 billion in the initial hours, according to market data.
Other crypto ETF issuers may soon follow BlackRock’s lead in advocating for in-kind redemption, according to market experts. Nevertheless, BlackRock has not yet submitted a comparable in-kind redemption request for its Ethereum ETF product. As the trend acquires momentum, it has discreetly distanced itself from alternative crypto ETF filings, despite being at the forefront of crucial ETF offerings.
Asset managers awakened to the pro-crypto US SEC, which resulted in the publication of numerous ETF filings on an earlier date. The Grayscale Bitcoin Adapters ETF is the most recent high-profile filing.
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