The digital asset market is witnessing discussions about changes in BlackRock's ETF model. SEC is considering the introduction of in-kind redemptions for IBIT ETF.
SEC's Decision to Extend Review Period
The SEC has postponed its final ruling on allowing in-kind redemptions for BlackRock IBIT ETF. In early 2024, the SEC only permitted cash redemption, which mandates fund managers to sell Bitcoin during redemptions. Now, the regulator is considering changes.
Difference Between Cash and In-Kind Redemptions
Cash redemption allows investors to receive cash upon redemption, while the in-kind model would facilitate receiving the actual assets, in this case, Bitcoin. This could be more tax-efficient and lower transaction costs.
Discussion of Regulatory Concerns
The SEC is concerned about market manipulation risks and the need for secure custody of Bitcoin in the in-kind model. The regulator is gathering feedback from various stakeholders to assess the implications of this shift.
The SEC's consideration of the potential in-kind redemption for IBIT ETF may have significant implications for the crypto asset market, enhancing tax efficiency and reducing costs. However, regulatory concerns will be discussed in the public comment process.
