Nasdaq Pushes for Rule Change to Boost BlackRock’s Spot Bitcoin ETF



Nasdaq has taken a significant step toward improving the functionality of BlackRock’s spot Bitcoin ETF IBIT by submitting a filing to the U.S. Securities and Exchange Commission (SEC). The proposal, filed on Jan. 24, seeks to permit in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF in the U.S.

The proposed change would allow Authorized Participants — institutional players responsible for creating and redeeming ETF shares — to use Bitcoin instead of cash when creating shares or redeeming their holdings. This approach eliminates the need for intermediaries, reducing bid/ask spreads and avoiding broker commissions associated with selling assets to raise cash for ETF issuance. However, this feature is limited to institutional players and remains inaccessible to individual investors.

Crypto analyst James Seyffart, who closely tracks ETF developments, noted that BlackRock “should have been allowed to do this from the start.” He emphasized that this adjustment would make ETFs more efficient by cutting down on unnecessary steps and parties involved in the process.

Benefits for Institutional Players

MartyParty, a pseudonymous crypto analyst, pointed out the added transparency that in-kind transactions would bring, enabling on-chain records of fund flows. Chris J. Terry, chief architect at Bitseeker Consulting, highlighted the tax advantages of the proposed model, explaining that in-kind redemptions help minimize capital gains distributions, benefiting long-term investors in the fund.

However, individual investors will still have to rely on cash-based transactions, as clarified by Seyffart. While this change primarily benefits institutions, it indirectly aids all investors by enhancing the ETF’s liquidity and efficiency.

The IBIT has attracted an impressive $39.57 billion in inflows, according to Farside data, making it a pivotal product in the crypto investment space.

A Wave of New ETF Filings

The filing coincides with a surge in ETF activity. On the same day, European investment firm CoinShares submitted applications for Litecoin and XRP ETFs, while Grayscale moved to convert its Solana (SOL) and Litecoin (LTC) Trusts into ETFs. Grayscale also filed for a Bitcoin Adopters fund and an Ethereum Premium Income fund.

As the competition heats up, Nasdaq’s move underscores the evolving landscape of crypto investment funds, aiming to address inefficiencies and cater to the growing demand from institutional players. Whether the SEC will greenlight this proposal remains to be seen, but it signals a strong push for innovation in the sector.



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