Nasdaq Files to Allow In-Kind Creation and Redemption for BlackRock's Bitcoin Trust (IBIT)

The process allows large institutional investors, called authorized participants (APs), to buy and redeem shares of the fund directly to bitcoin (BTC).

The U.S. Securities and Exchange Commission (SEC) has received a proposed rule change from Nasdaq to permit in-kind creation and redemption for the BlackRock iShares Bitcoin Trust (IBIT), according to a Friday filing.

The process allows large institutional investors, known as authorized participants (APs), to buy and redeem shares of the fund directly into bitcoin (BTC). It is considered to be more efficient as it allows APs to closely monitor the demand for the ETF and to act fast by buying or selling shares of the fund without cash being involved in the process. Retail investors are not eligible to participate.

When the SEC first approved spot bitcoin ETFs including IBIT in January, the agency allowed the funds to launch with cash redemption, instead of bitcoin.

"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 Intelligence ETF analyst James Seyffart noted on X. "Mainly [they] didn't want brokers touching actual Bitcoin."

BlackRock's IBIT is the largest spot BTC ETF on the market, attracting nearly $40 billion of inflows in its first year, making it the most successful ETF debut ever.