SEC Delays Decision on BlackRock’s In-Kind Bitcoin ETF Redemptions

The U.S. Securities and Exchange Commission (SEC) has decided to extend its review of whether BlackRock's iShares Bitcoin Trust can offer in-kind redemptions

The U.S. Securities and Exchange Commission (SEC) has decided to defer its decision on whether BlackRock’s iShares Bitcoin Trust can offer in-kind redemptions.

This type of redemption allows investors to receive actual bitcoin instead of cash when redeeming shares of the iShares Bitcoin Trust.

The SEC has opened the proposal to public comment, the agency announced Tuesday. This step, covered in a notice of a meeting agenda, pushes back the timeline for approval or rejection.

Nasdaq filed an amendment to an existing rule to permit in-kind creations and redemptions for the iShares Bitcoin Trust. The application was made on June 20, amending an application for the original Bitcoin ETF, which launched in early 2024.

The original ETF approval required that the ETF’s shares be redeemed for cash. That meant BlackRock needed to convert bitcoin to dollars before returning funds to investors, a process preferred by the SEC at the time due to its regulatory clarity.

The switch to in-kind transactions would streamline the ETF’s operations and could reduce transaction costs for investors. But it also raises policy and legal questions that the SEC is not yet ready to comment on.

The SEC is initiating proceedings under Section 19(b)(2)(B) of the Exchange Act to defer approval or disapproval of the proposed rule change.

The agency invites interested parties to submit any data, views or arguments they may have bearing on the proposal by July 17.

The outcome will be crucial for the future of crypto ETFs in the U.S.