BlackRock's iShares Bitcoin Trust ETF may receive a significant update from Nasdaq on Friday's Form 19b-4 filing, which proposed changes to the rules for exchange-traded funds that would allow for BTC redemptions in kind rather than cash.
Authorized participants, large institutional investors, can sell Bitcoin through a market maker and redeem ETF shares for the underlying Bitcoin instead of delivering cash.
That's the current situation, established in January 2024 when IBIT and other bitcoin ETFs were approved for trading by the SEC when Joe Biden was president and the regulator was led by crypto skeptic Gary Gensler.
But with newly inaugurated President Donald Trump, things are focused on creating clear regulation for the industry, including the firing of Gensler and the creation of the SEC's crypto task force.
On Thursday, the SEC repealed the controversial crypto accounting rule, SAB 121, which discouraged banks from taking regulatory control of crypto.
But this new law greatly streamlines the redemption process, according to Bloomberg ETF analyst James Seifert, fewer steps and fewer parties are needed to complete the redemption. And without the requirement to buy in cash, ETFs may be less likely to sell Bitcoin when redemption requests arrive.
In his response to X, Seifert pointed to the repeal of SAB 121 as a key part of the equation in the proposed ETF rule change.
“The side effects of canceling SAB 121 may be just beginning.” he suggested.
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