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American asset management company BlackRock is working on a new redemption model for its iShares Bitcoin 
$106,150 Trust (IBIT) ETF. The trading platform Nasdaq Stock Market LLC has submitted this in-kind redemption model to the U.S. Securities and Exchange Commission (SEC).
New Regulatory Proposal
Nasdaq’s proposed rule change is based on Section 19(b)(1) of the Securities Exchange Act of 1934. This amendment specifically aims to facilitate the transfer of the fund’s Bitcoin assets by qualified or authorized participants.
If approved, this regulation will allow authorized participants to redeem amounts in BTC instead of cash. The in-kind model is considered ideal for most exchange-traded products. However, during last year’s approval process, the SEC, led by Gary Gensler, favored a cash-based model, forcing issuers to withdraw from in-kind payments.
BlackRock’s BTC ETF Developments
This application follows BlackRock’s initiation of a BTC ETF variant through CBOE in Canada. BlackRock continues to take various steps globally regarding Bitcoin ETF products.
James Seyffart stated, “BlackRock/iShares has applied to allow in-kind creation and redemption transactions for Bitcoin ETFs.”
The new regulation could enhance the flexibility and efficiency of the IBIT ETF product. It will enable the introduction of alternative redemption methods for investors. BlackRock’s move may strengthen the integration of cryptocurrency assets with traditional financial instruments. If approved, the adoption of a BTC-based redemption model is seen as a significant step in the industry.
Market Implications
Approval of the in-kind redemption model could increase competition in the Bitcoin ETF market. Investors will have more diverse redemption options through this model.
Future developments will closely depend on how the SEC responds to this request. BlackRock’s strategic maneuvers may influence the regulatory framework of cryptocurrency markets. On Friday, IBIT saw $155 million in inflow, with total ETF inflows reaching $517 million. Daily inflows of $802 million, $248 million, $188 million, and $517 million were recorded between January 21-24.
In conclusion, BlackRock’s request for an in-kind redemption model for iShares Bitcoin Trust may deepen the integration between cryptocurrency and traditional financial instruments. This change could pave the way for more flexible and diverse investment options in the ETF market.
