BlackRock's iShares Bitcoin Trust ETF may soon offer in-kind redemptions of Bitcoin, according to a recent Nasdaq filing proposing a rule change. This change, if approved, would allow authorized participants, typically institutional investors, to exchange ETF shares directly for the underlying Bitcoin rather than cash. The current process requires the sale of Bitcoin through market makers to fulfill cash redemption requests. This improvement is expected to increase the efficiency of ETF operations by reducing the number of transactions involved in redemptions. The proposed rule change follows the SEC's recent reversal of a controversial crypto accounting rule (SAB 121) under new leadership, suggesting a more favorable regulatory environment for cryptocurrency. The removal of the rule is viewed as a shift towards simplifying cryptocurrency regulations and allowing banks to engage with crypto assets more easily, possibly reducing Bitcoin selling pressure during redemption requests.

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