On May 14, 2025, the U.S. Securities and Exchange Commission (SEC) announced a delay in its decision regarding the 'in-kind' redemption mechanism for BlackRock's iShares Bitcoin Trust. The proposed mechanism would allow authorized participants to create or redeem fund shares directly in Bitcoin instead of cash, which was expected to improve trading efficiency and reduce the gap between the fund's price and the value of its underlying assets.
This decision came after the SEC opened the floor for public comments on the amendment proposed by Nasdaq in January 2025, and in the same context, the authority also postponed its decision on Grayscale’s proposals for Solana and Litecoin, in addition to the entry of the 21Shares Dogecoin fund into the comment phase.
Market reaction
After the news, the price of Bitcoin experienced minor fluctuations, temporarily rising to around $104,000 before dropping back and stabilizing at approximately $103,500, reflecting a state of anticipation among traders regarding the impact of the decision on market liquidity and trading opportunities.
Why is the delay important?
1. Reducing deviation: The 'in-kind' redemption mechanism helps maintain the net asset value of the fund close to its market price.
2. Enhancing liquidity: Direct conversion of cryptocurrency reduces the time and costs associated with converting Bitcoin to cash.
3. Protecting investors: Collecting public feedback allows the authority to ensure the protection of investors' rights from any potential risks.
What’s next?
The authority extended the comment period until early June 2025, after which it will decide whether to approve or reject the amendment.
If approved, this would open the stage for actual creation and redemption requests in Bitcoin.
Followers expect that implementing this mechanism could enhance the attractiveness of the ETF and increase its trading volume in the medium term.
Do you think that approval of the 'in-kind' mechanism will be a turning point for Bitcoin funds and help stabilize their prices? Share your opinion in the comments!
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