Michaela Alvez
Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission (SEC) on behalf of asset manager BlackRock, seeking approval to allow in-kind creation and redemption for its spot Bitcoin exchange-traded fund (ETF), the BlackRock iShares Bitcoin Trust (IBIT).
The January 24 filing outlines a proposed rule change that would allow authorized participants, typically large financial institutions, to use Bitcoin directly, rather than cash, for creating new shares or redeeming existing ones.
In a post on X, Bloomberg ETF analyst James Seyffart argued that BlackRock “should have been allowed to do this from the beginning” when IBIT debuted in January 2024, alongside ten other U.S. spot Bitcoin ETFs.
“The main point is that the In-kind model is way more streamlined with less steps and less parties involved,” Seyffart wrote.
The proposed model offers greater efficiency for ETFs by bypassing bid/ask spreads and broker commissions. These funds are typically incurred when selling a basket of assets to generate cash for share issuance. However, cash-based creation still provides more flexibility for fund participants.
Chris J. Terry, Chief Architect at Bitseeker Consulting, emphasized that the proposed mechanism aims to benefit liquidity providers, ultimately enhancing ETF liquidity. He also pointed out that in-kind redemptions help improve tax efficiency by minimizing capital gains distributions, which is advantageous for long-term investors.
The filing arrives as the crypto ETF sector sees increased activity. Multiple new applications are being submitted on the same day.
IBIT Leads the Charge Amid Surge in Crypto ETF Applications
Since its launch, IBIT has quickly established itself as the largest spot Bitcoin ETF in the U.S. It has attracted $39.57 billion in inflows, as reported by data from Farside.
Meanwhile, U.S.-based investment firms Osprey Funds and Rex Shares have formally submitted filings to the SEC. These filings aim to seek approval for a series of cryptocurrency ETFs. Among these proposed funds are those targeting well-known meme coins like Dogecoin, Official Trump (TRUMP), and Bonk.
The investment firms also outlined plans to introduce ETFs that would focus on leading cryptocurrencies like Bitcoin (BTC), Ethereum (ETHER), Solana (SOL), and XRP. These funds focus on holding the actual spot cryptocurrencies, as well as related financial derivatives.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
