A notable benefit of this process is cost reduction and simplifying operations.
Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission (SEC) to introduce a new system for BlackRock’s iShares Bitcoin Trust (IBIT). This system would allow institutional investors to redeem ETF shares directly for Bitcoin instead of cash. This process is known as “in-kind” redemptions.
Currently, Bitcoin ETFs use a cash redemption system. This means investors redeem their shares for cash generated by selling BTC. However, the proposed in-kind system will change the process. The institutions responsible for creating and redeeming ETF shares would exchange ETF shares directly for Bitcoin. This takes out the need for these participants to Bitcoin.
A notable benefit of this process is cost reduction and simplifying operations. In addition, investors avoid extra taxes from selling BTC, making it more attractive. While in-kind redemptions are mostly aimed at institutional investors, there are indirect benefits for retail investors. These benefits include improved efficiency of ETF operations.
The SEC approved spot Bitcoin ETFs in 2024 and kept the system simple. The regulator required cash redemptions to avoid regulatory risks. However, the ETF market has seen significant growth, and Bitcoin has gained more mainstream appeal. This growth has mandated an upgrade. The new system will cater to the needs of this market.
If approved, this model may encourage more institutional participation in Bitcoin ETFs. A potential benefit could be stabilizing BTC prices. Notably, the move reflects the growing acceptance of digital assets. Grayscale, an asset manager, recently filed for a spot in Solana ETF. These filings could pave the way for further mainstream adoption of digital assets.
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
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NEW: BlackRock/iShares just filed to allow in-kind creation and redemption on their Bitcoin ETF $IBIT
As we're now seeing issuers (re-)attempt to allow in-kind creation/redemption for the spot bitcoin ETFs, it's useful to recall why this wasn't allowed in the first place. The SEC originally denied this request because they did not want to provide regulatory clarity that licensed Show more
Grayscale's amended S-3 gives a nice little background on the key sticking point for in-kind creation/redemption. The SEC promulgated rulemaking for digital asset safekeeping. Despite the fact that BDs and exchanges apparently believe they could comply with the rule and offer
