SEC weighs proposal to change BlackRock's spot Bitcoin ETF to allow in-kind redemptions

The U.S. Securities and Exchange Commission is weighing a proposal to change BlackRock's spot Bitcoin exchange-traded fund to allow in-kind redemptions.

In a filing posted on Thursday acknowledging the proposal, the SEC asked for comments to be sent in 21 days after its filing is published in the Federal Register. The agency could then decide to approve, disapprove or "institute proceedings," according to the filing .

Nasdaq, on behalf of BlackRock, posted an amended rule filing last month that would allow for redemptions and creations in kind for the iShares Bitcoin Trust, according to the Form 19b-4 filing .

Over a year ago when the SEC was considering whether to approve spot Bitcoin ETFs, firms were hashing out technical details over how the redemption process would work for such a product. The SEC favored a cash model that required BlackRock to move bitcoin out of storage, sell it right away, and then give the cash back to the investor.

The agency later approved BlackRock's spot ETF proposal, alongside others in January 2024.

Changing the redemption and creation process won't mean that individual investors will be able to do in-kind transactions, just the authorized participants involved, said James Seyffart, Bloomberg Intelligence ETF analyst, in a post on X.