BlackRock Proposes In-Kind Redemptions for Bitcoin ETFs to SEC
The US Securities and Exchange Commission (SEC) is reviewing a proposal from BlackRock Inc (NYSE: BLK) to implement in-kind redemptions for Bitcoin exchange-traded funds (ETFs). This change aims to simplify transactions for institutional investors by eliminating cash-based transactions, potentially setting a new industry standard.
A Revolutionary Shift in Bitcoin ETF Structure
- Nasdaq filed an amendment for BlackRock’s iShares Bitcoin Trust to allow in-kind redemptions.
- Authorized participants would receive Bitcoin directly instead of cash.
- The SEC has invited public commentary on the proposal.
- In-kind redemptions could enhance liquidity and reduce transaction costs.
- The initial resistance from the SEC favored cash redemptions for increased oversight.
- Approval could encourage other ETF issuers to adopt similar structures.
- Retail investors will not be directly impacted, but institutional investors could benefit significantly.
Grayscale’s Legal Win and Its Influence
- BlackRock's proposal aligns with evolving Bitcoin ETF regulations.
- Grayscale Investments won a court ruling compelling the SEC to reconsider its decision against converting its Bitcoin Trust to a spot ETF.
- This victory contributed to the approval of multiple Bitcoin ETFs in January 2024.
- The SEC's openness to in-kind redemptions indicates a changing regulatory attitude towards Bitcoin financial products.