BlackRock pushes SEC to approve direct Bitcoin transactions in ETF
ETFs aim for greater efficiency
Asset management giant BlackRock is advocating for a rule change in its spot Bitcoin ETF, iShares Bitcoin Trust, to enable in-kind redemptions instead of cash-only settlements.
According to Nasdaq, on January 24, the exchange filed an application with the U.S. Securities and Exchange Commission (SEC) on behalf of the iShares Bitcoin Trust. The proposed change seeks deeper integration of Bitcoin into institutional ETF operations.
Initially, the SEC approved spot Bitcoin ETFs with cash-only redemptions. However, BlackRock’s proposed changes would allow authorized participants—primarily large institutional investors—to directly buy and redeem ETF shares in Bitcoin.
This model is considered more efficient as it enables participants to act more swiftly without the need to sell BTC through a market maker for cash settlements.
Bloomberg ETF analyst James Seyffart noted that this rule should have been approved initially, as the in-kind model avoids bid-ask spreads and broker fees associated with selling a basket of assets to raise cash for issuing shares. However, the previous SEC administration was hesitant, primarily to prevent brokers from directly handling actual Bitcoin.
ETFs aim for greater efficiency
According to Seyffart, the proposed rules have limited impact on individual retail investors but could make ETFs theoretically trade even more efficiently. He also encouraged his followers to compare the current and proposed models, highlighting that the latter involves fewer steps and parties.
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The likelihood of BlackRock's proposal being approved is relatively high under the current circumstances.
BlackRock’s iShares Bitcoin Trust holds $60 billion worth of Bitcoin, representing about 2.7% of the circulating Bitcoin supply—a milestone achieved just one year after the fund’s launch.
BlackRock’s aggressive Bitcoin accumulation has positioned it among the largest institutional holders of the leading cryptocurrency, alongside MicroStrategy.
As we wrote, BlackRock CEO Larry Fink has voiced strong support for the tokenization of stocks and bonds, arguing it could revolutionize the financial industry.
