Bitcoin Trusts Get Fancy Transfers: Nasdaq's Crypto Rule Tweak
Published Date: 2/12/2025
Notice
Summary
Nasdaq wants to update the rules for the iShares Bitcoin Trust so it can move bitcoin in a new way called 'in-kind transfers.' This change affects investors who own shares of the Trust and could make trading smoother and more efficient. The SEC is now asking for public feedback before deciding, with the proposal filed in January 2025 and updated in February.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 0 costs, 1 mixed.
iShares Bitcoin Trust: Allow In‑Kind Transfers
Nasdaq proposes allowing the iShares Bitcoin Trust to accept or deliver bitcoin directly ("in‑kind" creations and redemptions) in addition to cash. The proposal was filed January 24, 2025 and amended February 4, 2025, and the SEC is taking comments through March 5, 2025.
New Deadlines and Basket Size Rules
The Trust will continue to issue and redeem Shares only in blocks called Baskets of 40,000 shares (or multiples). Cash creation orders must be submitted by 6:00 p.m. ET the business day before the trade date, while in‑kind orders must be submitted by 3:59 p.m. ET on the trade date.
Use of Trade Credits and Affiliate Financing
The Trust may use short‑term financing called "Trade Credits" from an affiliate (Coinbase Credit, Inc.) to enable purchases or sales of bitcoin in connection with cash creation or redemption orders. Such financing can be used to allow the Trust to transact on trade date and then be repaid on settlement date.
Bitcoin Custody and Cold Storage Details
The Trust's bitcoin will be held in a Custody Account with Coinbase Custody Trust Company, LLC and the private keys for that Custody Account will be kept in "cold storage." The Trust may temporarily maintain bitcoin in a Trading Account at the Prime Execution Agent in limited circumstances.
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