Proposed Alterations in BlackRock's Bitcoin-ETF Regulations by Nasdaq
The Nasdaq's recent proposal to modify the iShares Bitcoin Trust (IBIT) to allow for in-kind redemption could mark a significant shift in the spot bitcoin-ETF market. This change, which is currently awaiting approval from the SEC, could potentially enhance the appeal of spot bitcoin-ETFs for market participants, according to Bloomberg Intelligence analyst James Seyffart.
The iShares Bitcoin Trust, managed by BlackRock, currently manages approximately $60.6 billion worth of bitcoins, according to SoSoValue. If approved, the proposed modification would allow the exchange to accept bitcoin directly (in-kind) in the creation and redemption process of the fund's shares.
The new approach would enable investors to withdraw funds directly in bitcoins, rather than selling coins for fiat and receiving the equivalent in cash. This could lead to lower costs for investors, particularly for large institutional investors, as it bypasses certain intermediaries.
Allowing in-kind transactions may attract larger inflows from institutional players such as pension funds and endowments, who may prefer direct exposure to bitcoin rather than relying on cash-based creation/redemption mechanisms. This could increase scalability and liquidity in the market, further legitimising bitcoin’s status as a mainstream investable asset class.
However, the SEC remains cautious due to concerns about market manipulation and liquidity risks. The market is demonstrating strong demand for regulated, transparent bitcoin exposure, as seen in IBIT’s rapid growth. SEC approval of in-kind redemption would signal a more mature regulatory approach, likely encouraging broader institutional adoption.
As of the latest SEC filing (updated through June 27, 2025), the iShares Bitcoin Trust reports a net asset value (NAV) of $74.20 billion. This represents the approximate total value of bitcoins under IBIT’s management, reflecting the trust’s position as a leading vehicle for institutional bitcoin exposure.
In summary, enabling in-kind redemption could accelerate institutional adoption, lower costs, and further legitimise the spot bitcoin-ETF market, while IBIT currently manages bitcoins worth over $74 billion. The final decision on the proposal lies with the SEC, and the implications of its decision could shape the future of the bitcoin-ETF market.
## Implications of In-Kind Redemption for IBIT
- Lower Costs for Investors: In-kind redemption means investors can exchange bitcoin directly for ETF shares, bypassing certain intermediaries and potentially lowering transaction costs, especially for large institutional investors. - Increased Scalability and Liquidity: Allowing in-kind transactions may attract larger inflows from institutional players such as pension funds and endowments, who may prefer direct exposure to bitcoin rather than relying on cash-based creation/redemption mechanisms. - Market Maturity and Legitimacy: SEC approval of in-kind redemption would signal a more mature regulatory approach, likely encouraging broader institutional adoption and reinforcing bitcoin’s status as a mainstream investable asset class. - Risk and Regulatory Considerations: The SEC remains cautious due to concerns about market manipulation and liquidity risks. However, the market is demonstrating strong demand for regulated, transparent bitcoin exposure—as seen in IBIT’s rapid growth.
## Current Total Value of Bitcoins Under IBIT Management
| Feature | Details | |----------------------------------|-----------------------------------------------------| | NAV (approximate) | $74.20 billion | | Per-share NAV | $60.70 | | Basket size (shares/BTC/value) | 40,000 shares = 22.72 BTC ≈ $2.45 million |
[1] Source: Bloomberg Intelligence [2] Source: SoSoValue [3] Source: iShares Bitcoin Trust SEC Filing (updated through June 27, 2025)
Investing in Bitcoin through the iShares Bitcoin Trust (IBIT) could become more appealing for market participants, as the proposed modification allows for in-kind redemption, which could lead to lower costs, particularly for large institutional investors. This technology-driven change could potentially increase scalability and liquidity in the market, further legitimizing Bitcoin as a mainstream finance asset.
