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ZyCrypto 2025-01-25 20:38:15

BlackRock Files To Change Its Bitcoin ETF To Allow For In-Kind Redemptions — Good News For BTC?

Asset management giant BlackRock is pushing for a significant update to its spot Bitcoin (BTC) exchange-traded fund, the iShares Bitcoin Trust, to allow in-kind redemptions rather than just for cash. Authorized participants, aka large institutional investors, would be able to buy and redeem shares of the ETF directly in Bitcoin. This model is deemed more efficient as it lets authorized participants closely observe the demand for the fund and act swiftly by buying or selling shares of the ETF without being obliged to sell the BTC through a market maker and deliver cash. In-Kind Model Is “Way More Streamlined” Initially, the SEC approved spot Bitcoin ETFs like BlackRock’s IBIT with cash-only redemption, but this proposed update reflects a move toward bigger integration of Bitcoin in institutional ETF operations. “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’s ETF analyst James Seyffart observed on X. “Mainly [they] didn’t want brokers touching actual Bitcoin.” According to a Jan. 24 amended rule filing to the U.S. Securities and Exchange Commission (SEC), Nasdaq proposed “to allow for in-kind transfers of the Trust’s Bitcoin.” This in-kind model is more efficient for ETFs as it avoids bid spreads and broker commissions from selling the basket to raise cash for issuing shares. Notably, retail investors won’t have access to the in-kind redemption model as they will only be eligible to participate in the cash model. Only authorized participants willl be able to do in-kind redemptions and creations. “The main point is that the in-kind model is way more streamlined with less steps and less parties involved (and its how the vast majority of ETFs operate),” Seyffart explained. https://twitter.com/JSeyff/status/1882909249292181913 BlackRock’s Bitcoin ETF Breaks Records BlackRock now holds an astounding $60 billion worth of Bitcoin (BTC) in its iShares Bitcoin Trust, an impressive feat reached just one year after going live on Wall Street. This represents about 2.7% of Bitcoin’s total circulating supply. BlackRock’s aggressive accumulation of Bitcoin has positioned it among the biggest institutional holders of the premier cryptocurrency, even usurping MicroStrategy’s well-known cache. BlackRock CEO Larry Fink has also recently sparked excitement among market participants after speculating a BTC price target of as high as $700,000 if more institutions adopt it. He has been talking with sovereign wealth funds about allocating 2% to 5% of their assets to Bitcoin, which indicates that even entities that usually avoid risk are becoming interested amid President Donald Trump’s return to the White House for his second term.

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