Isabella García
Nasdaq has submitted an amendment on behalf of BlackRock to modify the structure of its proposed spot Bitcoin exchange-traded fund (ETF), the iShares Bitcoin Trust. The proposed change aims to allow in-kind redemptions, offering an alternative to the existing cash-based process.
According to a Form 19b-4 filing submitted on Friday, this amendment would enable the trust to transfer Bitcoin directly in and out of the fund, bypassing the need for cash transactions.
“The Exchange proposes to update the redemption and creation process for the Trust to allow for in-kind transfers of Bitcoin, providing an alternative to the current cash-based mechanism,” the filing explains.
Historically, the U.S. Securities and Exchange Commission (SEC) required spot Bitcoin ETFs to operate under a cash redemption model. Under this structure, firms like BlackRock were obligated to convert Bitcoin into cash when processing redemptions, potentially introducing inefficiencies.
If approved, this change would streamline ETF operations by enabling authorized participants—not individual investors—to directly exchange Bitcoin for fund shares, or vice versa, rather than going through the cash conversion process.
Expert Insights on Nasdaq’s In-Kind Redemptions
ETF analyst James Seyffart of Bloomberg Intelligence highlighted the potential benefits of the revised process. In a recent post on X, he noted that the adoption of in-kind redemptions could lead to more efficient trading for Bitcoin ETFs.
“Allowing in-kind redemptions simplifies operations and could improve ETF efficiency,” Seyffart said. “In my view, this should have been implemented from the start, but it faced resistance from SEC commissioners with concerns over its impact.”
While individual investors won’t directly benefit from in-kind redemptions, the new mechanism could reduce costs and improve liquidity for the ETF, making it more attractive to market participants.
This move also signals ongoing refinement in the infrastructure supporting spot Bitcoin ETFs as asset managers, exchanges, and regulators align on operational details.
