Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) requesting approval to introduce in-kind transfers for BlackRock’s iShares Bitcoin Trust. This amendment would provide an alternative to the existing cash-based creation and redemption process for the ETF.

The proposed changes would allow authorized participants—typically large institutions, not individual investors—to exchange ETF shares directly for underlying assets, including Bitcoin. This in-kind process is expected to streamline transactions, enhance liquidity, and simplify operations for the ETF.

Bloomberg ETF analyst James Seyffart highlighted that in-kind transfers reduce complexity by involving fewer steps and parties. He criticized past SEC restrictions under Chair Gary Gensler, which enforced cash-based redemptions due to regulatory preferences. Seyffart argued that such processes should have been permitted from the outset.

The introduction of in-kind redemptions could also improve tax efficiency. Chris J. Terry of Bitseeker Consulting noted that this mechanism minimizes capital gains distributions, ultimately benefiting shareholders.

BlackRock’s iShares Bitcoin Trust has demonstrated strong market performance, with net inflows reaching $661.9 million on its first business day. As of January 22, the fund increased its Bitcoin holdings by 6,470 BTC, bringing its total to 563,134 BTC, valued at $55.6 billion based on current prices.