Amid the new crypto era fueled by Donald Trump's recent executive order, BlackRock and Nasdaq are calling for allowing redemptions in physical Bitcoin on spot ETFs.
The signing of this executive order by Trump has marked a before and after in the crypto landscape, paving the way for radical changes in the market. Recently, the investment giant, BlackRock, began to push for innovation in financial products related to Bitcoin.
In this context, the firm made a new filing requesting the inclusion of Bitcoin (BTC) in-kind redemptions in its spot ETF. If this request is approved, it means that investors would be able to redeem their shares in the fund not for fiat money, but for Bitcoin.
In-kind repayments could revolutionize Bitcoin ETFs
Currently, Bitcoin ETFs, which were approved in the United States last year, operate under a cash-back system. This means that investors who wish to dispose of their holdings receive the equivalent value of their holdings in dollars. However, BlackRock's new application seeks to add a layer of innovation to these financial investment instruments, optimizing the experience for retail and institutional investors.
La application, led by Nasdaq through an amended rule proposal filed with the Securities and Exchange Commission (SEC), aims to change this paradigm and allow for in-kind BTC redemptions, an innovation whereby investors could receive bitcoins directly, eliminating the need for conversion to fiat currency and minimizing system friction.
On several occasions, experts have advocated the integration of in-kind redemptions into Bitcoin ETFs as a move that would simplify operations, increase efficiency, and reduce tax complexities for institutional participants. As such, the potential approval of this proposal by BlackRock and Nasdaq has the potential to make ETFs significantly more attractive to a broader range of investors.
Trump's Executive Order: A Catalyst for Change in the Crypto Market
The recently signed executive order by President Donald Trump is laying the groundwork for greater regulatory clarity in the cryptocurrency sector in the United States. As reported by this media, this order calls for responsible and favourable regulation of the sector, with the aim of providing greater legal clarity and a framework that stimulates innovation and institutional investment.
This regulatory push has allowed companies like BlackRock and Nasdaq to explore new strategies for their financial products, including the possibility of offering redemptions in physical Bitcoin on the iShares Bitcoin Trust (IBIT) spot ETF.
Commenting on BlackRock's request, Bloomberg ETF analyst James Seyffart said: stressed that fund managers initially contemplated including in-kind redemptions in Bitcoin ETFs, but that the current administration, led by Joe Biden and Gary Gensler, as SEC chairman, had blocked such a possibility. Now, under new leadership, the way is being paved for more ambitious proposals.
Possible implications for Bitcoin ETFs
If the change proposed by BlackRock and Nasdaq is approved, the adoption of in-kind redemptions would have several implications for the Bitcoin exchange-traded fund market.
According to Seyffart, institutional investors could benefit from cost reductions and tax simplifications. On the other hand, although it is estimated that this measure would not have a significant impact on individual investors, the possibility of obtaining Bitcoin directly could increase market liquidity and generate greater demand for ETFs.
In short, BlackRock and Nasdaq’s application to include in-kind redemptions in Bitcoin spot ETFs could mark a fundamental shift in the sector, by simplifying operations and reducing costs it could expand the accessibility and liquidity of the Bitcoin market. The success of this proposal could set a new standard for the industry, showing a growing integration of digital assets into traditional financial systems.
