According to ShibDaily, Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) on behalf of asset manager BlackRock. The proposal seeks approval for in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT), a spot Bitcoin exchange-traded fund (ETF). The filing, dated January 24, suggests a rule change that would permit authorized participants, usually large financial institutions, to use Bitcoin directly instead of cash for creating or redeeming shares.
Bloomberg ETF analyst James Seyffart commented on the proposal, stating that BlackRock should have been allowed this option from the start when IBIT was launched in January 2024, alongside ten other U.S. spot Bitcoin ETFs. Seyffart noted that the in-kind model is more streamlined, involving fewer steps and parties, which could lead to more efficient ETF trading by eliminating bid/ask spreads and broker commissions. However, he acknowledged that cash-based creation offers more flexibility for fund participants.
Chris J. Terry, Chief Architect at Bitseeker Consulting, highlighted the benefits of the proposed mechanism for liquidity providers, which could enhance ETF liquidity. He also mentioned that in-kind redemptions improve tax efficiency by reducing capital gains distributions, benefiting long-term investors. The filing comes amid increased activity in the crypto ETF sector, with multiple new applications being submitted.
Since its inception, IBIT has become the largest spot Bitcoin ETF in the U.S., attracting $39.57 billion in inflows, according to data from Farside. Meanwhile, U.S.-based investment firms Osprey Funds and Rex Shares have also filed with the SEC, seeking approval for a series of cryptocurrency ETFs. These proposed funds include those targeting popular meme coins like Dogecoin, Official Trump (TRUMP), and Bonk, as well as leading cryptocurrencies such as Bitcoin (BTC), Ethereum (ETHER), Solana (SOL), and XRP. The funds aim to hold actual spot cryptocurrencies and related financial derivatives.