Nasdaq has presented an innovative proposal to the United States Stock Exchange and Securities Commission (SEC) that could transform the operational framework of the funds (ETF) quoted by Bitcoin Exchange. The proposal, focused on the Blackrock Bitcoin Trust (Ibit), seeks to introduce Bitcoin “in kind” channels, offering a simplified and profitable alternative to the current process of redemption of cash.
Only at: Blackrock Files to allow creations and refunds in kind for your Bitcoin ETF spot! pic.twitter.com/ssigx4utrg
– Magazine bitcoin (@bitcoinmagazine) January 24, 2025
What are channels in kind?
According to the proposed system, institutional players known as authorized participants (AP), responsible for creating and redeeming ETF actions, could choose to exchange ETF actions directly by Bitcoin instead of cash. This innovation eliminates the need to sell bitcoin to generate cash for reimbursements, simplifying the process while reducing operating costs.
While this option would only be available to institutional participants and not retail investors, experts suggest that improved efficiency could indirectly benefit everyday investors. By reducing operational obstacles, refunds in kind have the potential to make Bitcoin ETFs more simplified and profitable for all market participants.
Related: The Blackrock CEO, Larry Fink, forecasts $ 700k bitcoin price amid inflation concerns
Why change?
The cash redemption model, implemented in January 2024 when the SEC first approved the Bitcoin Spot ETFs, was designed to prevent financial institutions and corridors from managing Bitcoin directly. This approach prioritized regulatory simplicity during the nascent stages of Bitcoins ETF.
However, the rapid growth of the Bitcoin ETF market has created new opportunities to improve its infrastructure. With evolution regulations and an ecosystem of more mature digital assets, Nasdaq and Blackrock now see a way to adopt a more efficient redemption model.
Benefits of channels in kind
- Operational efficiency:
- Reduce the complexity and number of steps in the redemption process.
- Rimule ETF operations, saving time and costs.
- Tax advantages:
- Avoiding the sale of Bitcoin minimizes capital gains distributions, making ETFs more efficient in taxes for institutional investors.
- Market stability:
- It reduces the sale pressure on Bitcoin during reimbursements, which potentially stabilizes the price of the asset.
Regulatory and market context
Nasdaq’s proposal coincides with significant regulatory developments under the Pro-Bitcoin Trump administration. Recent policies changes, such as the repeal of the Personnel Accounting Bulletin 121 (SAB 121), have raided the way for a broader adoption of cryptocurrencies. The elimination of SAB 121 eliminated the barriers that previously discouraged banks to offer cryptocurrency custody services, creating a more favorable environment for innovations such as the redemption model in kind of Nasdaq.
Blackrock Bitcoin ETF: A market leader
Since its launch of 2024, Ishares Bitcoin ETF of Blackrock has become a market leader, with more than $ 60 billion in tickets. The constant growth of the fund highlights the institutional demand of Bitcoins investment products. Innovations such as the Nasdaq redemption model could further improve Ibit’s attraction to institutional investors.
Take into account the consistent ascending trend of green candles, which reflects strong and constant entries.
Related: what predicts Bitcoin’s price history for February 2025
Conclusion
Nasdaq’s proposal to introduce channels in kind for Blackrock’s Bitcoin ETF represents a crucial moment for the Bitcoin ETF market. By simplifying redemption processes, offering fiscal efficiencies and reducing the sale pressure on Bitcoin, the model can significantly improve the attractiveness and performance of Bitcoin ETFs for institutional investors.
As the ETF market of mature Bitcoin and regulatory support continues to grow, innovations such as this are ready to boost greater adoption. If approved, Nasdaq’s proposal could mark a critical step forward, solidifying Bitcoin’s ETFs as an cornerstone of institutional digital assets investment, while indirectly benefiting retail participants.
With a favorable regulatory climate and a growing institutional interest, the future of Bitcoin ETF looks brighter than ever.
