BlackRock IBIT Bitcoin ETF Set for Potential In-Kind Upgrade
Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to allow physical creation and redemption of the BlackRock iShares Bitcoin ETF (IBIT).
The request, submitted on January 24, seeks to amend the ETF’s operating framework to allow direct Bitcoin trading as well as the existing cash-based model.
BlackRock Bitcoin ETF inflows consistent with Nasdaq’s physical push
The proposed physical process will streamline the creation and redemption system of ETFs, reducing the number of intermediaries involved. However, this feature will be exclusive to institutional players, while retail investors will not be able to participate in physical trading.
If approved, this change will allow Authorized Participants (APs) to resolve Bitcoin trading rather than converting assets into cash. This approach has potential benefits including tax efficiency, improved price consistency Bitcoin market valueand a more streamlined process.
“Similar to European ETPs, the BTC ETF will be more efficient. Authorized participants can now create and exchange directly with Bitcoin instead of just using cash.” Cryptocurrency analyst Tom Wan point out.
Bloomberg ETF analyst James Seyffart highlighted the model’s operational efficiency. He noted that physical transfers involve fewer steps and parties than the cash process, which should make ETF trading smoother. This efficiency can be further improved The appeal of Bitcoin ETFs to institutional investors.
“This means that ETFs should trade more efficiently than in theory because things can be simplified,” Seyffart explain.
Nasdaq’s request reflects growing demand for more flexible ETF structures. when Spot Bitcoin ETF First introduced in January 2024, the SEC requires issuers to use a cash-only redemption model because the regulator “does not want brokers to have access to actual Bitcoin.” sefat.
However, as the market matures, Call for physical transfer have gained momentum, with supporters arguing they are more in line with the decentralized nature of digital assets.
The filing coincides with IBIT significant growth period. The ETF recently attracted more than $2 billion in new inflows for six consecutive days, according to SoSoValue.
Since its launch, IBIT has seen cumulative inflows of $39.7 billion, solidifying its role as The best-performing spot Bitcoin ETF in the United States.
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