Nasdaq Files for In-Kind Redemptions for BlackRock Spot Bitcoin ETF

Nasdaq Files for In-Kind Redemptions for BlackRock Spot Bitcoin ETF

Nasdaq Proposes Rule Change for BlackRock’s Bitcoin ETF to Allow In-Kind Transactions

Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to allow in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT), according to a Friday filing.

This adjustment would enable authorized participants (APs)—large institutional investors—to directly buy and redeem IBIT shares using Bitcoin (BTC) instead of cash. The process is expected to be more efficient, allowing APs to better match ETF demand and trade without requiring cash transactions. However, retail investors remain ineligible for direct participation.

When the SEC initially approved spot Bitcoin ETFs in January, it mandated a cash-based system rather than direct Bitcoin transactions. Bloomberg Intelligence analyst James Seyffart noted on X that this restriction stemmed from concerns that regulators didn’t want brokers handling actual Bitcoin.

BlackRock’s IBIT has been the most successful ETF launch in history, attracting nearly $40 billion in inflows within its first year. The proposed rule change could further streamline the fund’s operations and improve market efficiency for institutional investors.

Nasdaq has submitted a proposed rule change to the U.S. Securities and Exchange Commission (SEC) that would enable in-kind creation and redemption for BlackRock’s iShares Bitcoin Trust (IBIT). This change would allow authorized participants (APs), typically large financial institutions, to exchange ETF shares directly for Bitcoin (BTC) instead of cash.  

Currently, spot Bitcoin ETFs, including IBIT, operate under a cash redemption model, requiring APs to use fiat currency when creating or redeeming shares. An in-kind mechanism, however, would streamline the process by allowing APs to transact directly in Bitcoin, reducing friction, improving liquidity, and potentially lowering costs.  

Bloomberg Intelligence ETF analyst James Seyffart noted that this model should have been approved initially, but regulatory concerns led SEC Chair Gary Gensler and Commissioner Caroline Crenshaw to opt for a cash-only system. Critics argue that limiting ETFs to cash transactions increases inefficiencies and forces intermediaries to handle conversions.  

BlackRock’s IBIT has already shattered records, amassing nearly $40 billion in inflows within its first year, making it the most successful ETF launch in history. If the SEC approves this in-kind rule change, it could drive even greater institutional participation in Bitcoin ETFs and further cement IBIT’s dominance in the market.