US SEC Reviews BlackRock’s Proposal for Bitcoin ETF In-Kind Redemptions
Highlights
- BlackRock proposes in-kind Bitcoin ETF redemptions to cut costs, boost liquidity.
- SEC shifts stance, reviews BlackRock’s Bitcoin ETF for direct BTC redemptions.
- In-kind redemption could stabilize Bitcoin prices by avoiding forced sales.
The U.S. Securities and Exchange Commission (SEC) is reviewing a proposal from BlackRock to allow in-kind redemptions for its spot Bitcoin ETF. The regulatory agency acknowledged the proposal in a Thursday filing, inviting public comments within 21 days of its publication in the Federal Register.
BlackRock’s Proposal for Bitcoin ETF In-Kind Redemptions
According to an X post by ETF Store President Nate Geraci, the US SEC is evaluating whether to approve in-kind redemptions for BlackRock’s Bitcoin ETF which recently expanded to Europe. The Nasdaq submitted an amended 19b-4 filing on behalf of BlackRock, requesting this change for the iShares Bitcoin Trust.
The SEC had previously required cash redemptions for Bitcoin ETFs when it approved multiple spot Bitcoin ETFs in January 2024.
Under the current model, when an investor redeems shares, the issuer sells Bitcoin and distributes cash to the investor. BlackRock’s proposal would instead allow authorized participants (APs) to receive Bitcoin directly rather than cash.
Potential Benefits of In-Kind Redemptions
If approved, in-kind redemptions could provide advantages for institutional investors by reducing transaction costs and improving market liquidity.
Bloomberg ETF analyst James Seyffart noted that this change would not apply to retail investors, as only APs—typically large financial institutions—would be allowed to redeem shares in Bitcoin.
Shifting from cash-based redemptions to in-kind transactions could also help avoid forced Bitcoin sales, which might reduce downward price pressure on the asset. This process would make Bitcoin ETFs function more like traditional commodity ETFs, such as those for gold.
Regulatory Shift in Bitcoin ETF Policies
The SEC’s decision to consider in-kind redemptions marks a shift from its earlier position. When the agency initially approved spot Bitcoin ETFs, it favored a cash model due to concerns about market manipulation and volatility.
However, with growing institutional interest in Bitcoin ETFs, the regulatory stance appears to be evolving.
BlackRock’s request comes amid broader changes in the crypto investment landscape. In August 2023, Grayscale Investments won a lawsuit against the SEC, forcing the regulator to review its rejection of Grayscale’s attempt to convert its Bitcoin Trust into a spot ETF. This legal victory contributed to the eventual approval of multiple spot Bitcoin ETFs in January 2024.
Meanwhile, amid the cooling off of the crypto regulations, the CBOE BZX Exchange has also filed 19b-4 applications for XRP ETFs with the SEC on behalf of Bitwise, Canary Capital, 21Shares, and WisdomTree.
- S&P Launches Crypto 50 Index But There’s A Catch
- NYSE Owner ICE to Invest $2B in Polymarket as Interest in Prediction Markets Heats Up
- Expert Predicts SOL ETF Approval This Week as Solana ETPs Break All-Time Record
- XRP On-Chain Data Flashes Buy Signal as Analysts Target $4
- U.S. To Start Funding Its Bitcoin Reserve Anytime, Says Senator Lummis as BTC Rally Extends
- Cardano Price Consolidates Below Key Resistance Ahead of ETF Verdict — Is a 50% Rally in Sight?
- Solana Price Eyes 56% Rebound Amid Solana Company’s Massive $530M SOL Acquisition
- Ethereum’s Price Bullish Cycle Resumes as Grayscale Launches Spot Staking ETPs – Is $7,331 Next?
- Pi Network Price Risky Pattern Points to Crash as 14M Coins Leave OKX
- Bitcoin Price Prediction as Exchange Reserves Hit 6-Year Low—Is $150K Within Reach?
- Dogecoin Price Rebounds 15% From Buy Zone as Whales Add 30M DOGE – Can Bulls Push Beyond $0.30?
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
