Key Takeaways
BlackRock met with the SEC’s Crypto Task Force to discuss ETF workflows and in-kind redemption structures.
The firm used the April 1 meeting to deepen discussions on in-kind redemptions, potentially paving the way for SEC approval of its January ETF filing.
BlackRock and the US Securities and Exchange Commission met this week to discuss potential changes to crypto exchange-traded product workflows, including transitioning to in-kind redemptions for digital asset funds.
The closed-door meeting, held on Monday, April 1, with the SEC’s newly formed Crypto Task Force, focused on the structure and mechanics of crypto ETFs.
BlackRock’s team is understood to have discussed in greater depth the potential for in-kind redemptions, a model the firm has already filed for in its spot Bitcoin ETF.
In-kind redemptions allow authorized participants to exchange ETF shares directly for the underlying asset, such as Bitcoin, instead of cash, improving efficiency and reducing costs. The meeting signals that such redemptions may be gaining regulatory traction.
The conversation comes as BlackRock’s crypto exposure continues to grow, with over 574,000 BTC held in its IBIT fund and more than 1.1 million ETH in its Ether ETF.
Senior representatives from BlackRock’s regulatory, product, and ETF teams participated in discussions on adapting existing ETP workflows to support in-kind systems.
Since approving spot Bitcoin ETFs in January 2024, the SEC has mandated cash-only redemption models, citing custody and compliance risks.
Nasdaq’s filing for BlackRock’s in-kind redemption model states that such a structure would align crypto ETFs more closely with traditional commodity-based ETFs.