SEC Approves In-Kind Repayments for BlackRock Bitcoin ETF

The Securities and Exchange Commission (SEC) has given the green light for a Bitcoin feature that it had previously resisted. The SEC approved spot Bitcoin ETFs in 2024, but initially pressured them to include only cash refunds and rejected the in-kind refund option in spot ETF applications. However, BlackRock applied for in-kind repayments for its ISHARES Bitcoin ETF at the beginning of 2025, marking a significant shift in the regulatory landscape.

Companies including BlackRock have been lobbying the SEC for months to allow in-kind investments and repurchases specifically for Bitcoin ETFs. If tax-advantaged refunds in kind are accepted, it will be positive for the cryptocurrency market. These features can be made without selling cryptocurrencies, thereby reducing the selling pressure in the market.

SEC Republican member Hester Peirce has indicated that the in-kind refunds that the SEC has been delaying on Bitcoin ETFs are imminent. Speaking at the Bitcoin Policy Institute, Peirce stated that in-kind creations and redemptions for Bitcoin (BTC) and crypto ETFs are on the horizon and will definitely come. She noted that the SEC's stance on Bitcoin ETFs is inadequate, with in-kind investment and refund application files currently under review by the SEC.

Peirce criticized the SEC's handling of the spot Bitcoin ETF, stating that the same investment and redemption applications for the spot Bitcoin ETF are going through the review process before the SEC. She expressed confidence that these features will definitely be approved at some point, citing the growing interest in these features.

The SEC under US President Donald Trump adopted a friendlier approach to Bitcoin and cryptocurrencies compared to the SEC under Joe Biden. Since the Trump administration, ETF applications have not been limited to Bitcoin and Ethereum, with many top firms filing with the SEC for altcoins ranging from XRP to Solana (SOL) and Dogecoin (DOGE).

While the market expects altcoin ETFs to be approved in 2025, analysts say the SEC has a high probability of approving most altcoin ETF applications. This development underscores the evolving regulatory environment for cryptocurrencies, with the SEC gradually warming up to the idea of in-kind investments and repurchases for Bitcoin ETFs.