Nasdaq has officially submitted a request to the U.S. Securities and Exchange Commission (SEC) to approve an amendment for the activation of the in-kind transfer mechanism for BlackRock’s Bitcoin Exchange-Traded Fund (ETF). This proposed change is designed to simplify transactions and improve liquidity within the fund, offering accredited participants more efficient ways to execute trades.
In-Kind Transfer Mechanism: A Key Step in Simplifying Bitcoin ETF Operations In the application filed with the SEC, Nasdaq has proposed a modification to the terms of the iShares Bitcoin Trust. The amendment would allow accredited investors to exchange fund shares for the actual underlying assets, such as Bitcoin, rather than relying on cash transactions. This change is expected to enhance operational flexibility and improve the fund’s efficiency by accelerating the redemption process and boosting liquidity.
Nasdaq’s filing emphasized that the in-kind transfer mechanism is an effective alternative to the current cash redemption process, which could reduce financial complexities and expedite transactions. James Seyfart, an ETF analyst at Bloomberg, noted that the amendment would streamline the trading process by reducing the number of parties involved, resulting in lower bureaucratic costs and faster transaction execution.
Impact on Accredited Investors and the IBIT Fund While this amendment may not drastically affect individual investors, it is expected to significantly improve the experience for accredited participants in the IBIT fund. Aside from improving liquidity, Chris J. Terry, a senior engineer at Bitseeker Consulting, highlighted that in-kind transfers could improve tax efficiency by reducing capital gains distributions, benefiting the fund’s shareholders.
IBIT Fund Performance: Strong Inflows and Recent Growth The BlackRock IBIT fund saw remarkable success with strong net inflows, reaching $661.9 million on its first day of trading after Donald Trump’s presidency. However, inflows have slowed in recent weeks. On January 22, the fund added approximately 6,470 new Bitcoins to its holdings, bringing the total to 563,134 Bitcoins, valued at around $55.6 billion at current market prices.
