In a quietly held meeting that could have major implications for the future of crypto investing, BlackRock sat down with the U.S. Securities and Exchange Commission (SEC) on April 1 to talk about possible changes in how crypto ETFs function — specifically, shifting from cash-based redemptions to in-kind redemptions.
The meeting, held behind closed doors with the SEC’s newly formed Crypto Task Force, was centered on technical aspects of crypto exchange-traded products (ETPs). BlackRock, which has already filed to include in-kind redemptions in its spot Bitcoin ETF, is pushing for a system where ETF shares can be directly exchanged for assets like Bitcoin instead of cash. It’s a model that’s common with traditional commodity-based ETFs and is seen as more efficient and cost-effective.
So far, the SEC has required all crypto ETFs to stick with cash redemptions due to custody and compliance concerns. But the fact that regulators are now willing to discuss the in-kind model with BlackRock and that this is happening in private, detailed task force meetings suggests that things may be shifting.
BlackRock has skin in the game. Its spot Bitcoin ETF now holds over 574,000 BTC, and its Ether ETF has more than 1.1 million ETH. Senior team members from the asset manager’s regulatory, product, and ETF divisions were all part of the discussion.
Interestingly, the SEC also met with the Crypto Council for Innovation’s Proof of Stake Alliance on the same day. Their talks focused on staking in ETPs — another sign that the regulatory conversation around crypto products is becoming more detailed, more collaborative, and potentially more open to innovation.
Also Read: BlackRock enters the UK crypto market with FCA registration
