Nasdaq has filed a proposed rule change to allow in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT), according to a Friday filing to the U.S. Securities and Exchange Commission (SEC).
The process allows large institutional investors, called authorized participants (APs), to buy and redeem shares of the fund directly to bitcoin (BTC).
It is considered to be more efficient as it allows APs closely monitor the demand for the ETF and to act fast by buying or selling shares of the fund without cash being involved in the process. Retail investors are not eligible to participate.
When the SEC first approved spot bitcoin ETFs including IBIT last January, the agency allowed to launch the funds with cash redemption, instead of bitcoin.
“It should have been approved in the first place but Gensler/Crenshaw didn’t want to allow it for a whole host of reasons they gave,” Bloomberg Intelligence ETF analyst James Seyffart wrote on X. “Mainly [they] didn’t want brokers touching actual Bitcoin.”
BlackRock’s IBIT is the largest spot BTC ETF on the market, attracting nearly $40 billion of inflows in its first year, making it the most successful ETF debut ever.