BlackRock's iShares Bitcoin Trust ETF is set to enhance its operational flexibility following a proposed rule change filed with Nasdaq, which would allow for in-kind Bitcoin redemptions instead of cash settlements. This change seeks to streamline the redemption process for authorized participants, primarily institutional investors, who will be able to exchange shares directly for Bitcoin held by the ETF. This marks a significant shift from the current practice where redemptions typically require cash sales, potentially reducing overall selling pressure on Bitcoin during redemption requests. The proposed changes are underpinned by a recent SEC decision withdrawing Staff Accounting Bulletin No. 121, which had imposed restrictions on crypto custody by banks. With this adjustment, market analysts, including Bloomberg's James Seyffart, anticipate that the operational dynamics of the ETF will improve, leading to more efficient trading and reduced Bitcoin liquidation.

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