Nasdaq seeks rule change for BlackRock’s Bitcoin ETF to permit in-kind creation and redemption
ock’s Bitcoin ETF to Allow in-Kind Creation and Redemption
Nasdaq has submitted a request for a rule modification on behalf of BlackRock to permit the creation and in-kind redemption of the spot Bitcoin exchange-traded fund (ETF). This action was widely anticipated, as noted by Bloomberg ETF analyst James Seyffart in a blog post on Jan. 24. He highlighted that BlackRock should have been capable of implementing this change ever since the launch of the BlackRock iShares Bitcoin Trust (IBIT) alongside 10 other US-based Bitcoin ETFs in January 2024. The official SEC filing, dated Jan. 24, outlined Nasdaq’s proposal to enable in-kind transfers of Bitcoin from the Trust. This adjustment implies that Authorized Participants, essential in creating and redeeming shares for the fund, would now have the flexibility to utilize either cash or Bitcoin for creating shares or receiving cash or Bitcoin when redeeming shares. By facilitating this modification, the ETF is expected to operate more efficiently while steering clear of bid/ask spreads and associated fees incurred from selling the asset basket to acquire cash for shares.
In essence, the new rule change will streamline the process of managing the Bitcoin ETF by introducing in-kind transfers, ultimately leading to cost savings and enhanced operational efficiency. By permitting Authorized Participants to use either cash or Bitcoin for share creation and redemption, the ETF is expected to operate more smoothly and with reduced transaction costs. The elimination of bid/ask spreads and additional fees will make it more attractive for institutional investors to participate in the ETF, thereby potentially boosting its liquidity and overall performance.
In conclusion, Nasdaq’s request for a rule change on behalf of BlackRock to allow in-kind creation and redemption of its Bitcoin ETF signifies a significant step towards enhancing the efficiency and appeal of the fund. This move is expected to simplify the process for Authorized Participants, reduce transaction costs, and improve the overall performance of the ETF. By implementing these changes, the ETF is poised to attract a broader base of institutional investors and potentially position itself as a more competitive and appealing investment option in the cryptocurrency market.
Overall, Nasdaq’s application to enable in-kind creation and redemption of BlackRock’s Bitcoin ETF signifies a pivotal development in the cryptocurrency market. This adjustment is expected to streamline operations, reduce costs, and enhance the appeal of the ETF to institutional investors. Through this proposed rule change, BlackRock’s Bitcoin ETF may emerge as a more efficient and lucrative investment opportunity for those seeking exposure to the rapidly evolving digital asset market.
