On 9 July 2025, the United States Securities and Exchange Commission (US SEC) publishes a Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 2, as Modified by Amendment No. 2, to Amend the Rules Governing the Listing and Trading of the iShares Bitcoin Trust to Permit In-Kind Creations and Redemptions [Release No. 34-103406; File No. SR-NASDAQ-2025-008], by The Nasdaq Stock Market LLC. The proposal seeks to amend the operational mechanics of the iShares Bitcoin Trust to allow for in-kind creations and redemptions of shares, in addition to the currently permitted cash-based process.
The Nasdaq Stock Market LLC filed the original proposed rule change on 24 January 2025 pursuant to Section 19(b)(1) of the United States Securities Exchange Act of 1934 and Rule 19b-4 thereunder. On 4 February 2025, Nasdaq submitted Amendment No. 1, which replaced and superseded the initial filing in its entirety. The proposal was published for comment in the Federal Register on 12 February 2025 (90 FR 9446). On 13 May 2025, the US SEC instituted proceedings under Section 19(b)(2)(B) to determine whether to approve or disapprove the rule change. Subsequently, on 1 July 2025, Nasdaq submitted Amendment No. 2, which replaced and superseded Amendment No. 1 and the original filing in full. On 9 July 2025, the Commission issued the current notice to solicit public comment on the proposed rule change, as modified by Amendment No. 2.
Proposed Amendments Under Amendment No. 2
The Nasdaq Stock Market LLC proposes to update certain representations relating to the creation and redemption of shares of the iShares Bitcoin Trust. Specifically, the proposal would permit the Trust to allow for “in-kind” transfers of bitcoin, thereby enabling authorised participants to deliver or receive bitcoin directly, rather than transact in cash.
Shares of the iShares Bitcoin Trust are currently listed and traded on Nasdaq under Rule 5711(d), which governs Commodity-Based Trust Shares. The Trust is sponsored by iShares Delaware Trust Sponsor LLC, a Delaware limited liability company and an indirect subsidiary of BlackRock, Inc. Coinbase Custody Trust Company, LLC serves as the bitcoin custodian for the Trust, while Coinbase, Inc. is the Prime Execution Agent. The Bank of New York Mellon acts as custodian for the Trust’s cash holdings and serves as its administrator.
Under the amended framework, bitcoin will be held by the Bitcoin Custodian in a cold storage Custody Account. Temporary holdings related to transaction activity may be maintained in a Trading Account managed by the Prime Execution Agent. The Trust’s bitcoin held in the Custody Account will be stored offline, with private keys generated and retained in “cold storage” for enhanced security.
The proposal establishes distinct order cut-off times:
- For cash orders, the cut-off time will be 6:00 p.m. ET on the business day before trade date.
- For in-kind orders, the cut-off time will be 3:59 p.m. ET on the trade date.
In an in-kind creation, the authorised participant or its agent deposits bitcoin into the Trust’s Trading Account in exchange for Trust shares. In an in-kind redemption, the Trust delivers bitcoin from its Trading Account to the authorised participant or its agent in exchange for shares.
If the authorised participant fails to deliver bitcoin on settlement date for a creation, it may:
- Cancel the order,
- Delay settlement, or
- Instruct the Trust to execute a bitcoin purchase, in which case the participant delivers cash and absorbs the cost differential between the NAV-calculated price and the market execution price, if higher.
In a cash-based transaction, the Trust executes a corresponding bitcoin purchase or sale through a Bitcoin Trading Counterparty or via the Prime Execution Agent’s Coinbase Prime service. The Trust may also utilise trade credit facilities provided by Coinbase Credit, Inc., an affiliate of the Prime Execution Agent, allowing it to obtain bitcoin or cash on trade date pending full settlement.
The amendment proposes to replace existing rule text stating that Baskets are issued or redeemed “only in exchange for an amount of cash” with revised language stating that issuance or redemption may be “in exchange for an amount of bitcoin and/or cash.” This aligns the rulebook with the operational amendments proposed in the filing.
Nasdaq states that the proposal is consistent with Section 6(b) and furthers the objectives of Section 6(b)(5) of the United States Securities Exchange Act by promoting just and equitable principles of trade, removing impediments to a free and open market, and protecting investors. According to the Exchange, enabling in-kind creation and redemption will increase operational efficiency by allowing authorised participants to source or deliver bitcoin directly. This change may reduce market impact from the Trust’s trading activities and lead to cost efficiencies that benefit end investors.
The US SEC is soliciting public comments on the proposal. Comments may be submitted via the Commission’s internet comment form or by email to rule-comments@sec.gov, with File No. SR-NASDAQ-2025-008 in the subject line. Submissions must be received within 21 days of publication in the Federal Register.
(Source: https://www.sec.gov/files/rules/sro/nasdaq/2025/34-103406.pdf)
