Gensler’s replacement is open to in kind redemption for the ETFs. The rumor is that Blackrock wants to be able to redeem for Bitcoin. (Not sure if I buy the rumor or not)
Discussion
Explain to me the mechanics and incentives thanks, I’ll zap you 42 if I understand
In-kind redemptions allow Bitcoin ETF investors to redeem their shares for actual Bitcoin rather than cash. This creates additional accountability by requiring the ETF to hold the Bitcoin it claims to have, as it must deliver the asset upon redemption. This mechanism makes fractional reserve practices more difficult, as any discrepancy between claimed and actual holdings would quickly be exposed.
This structure is also directionally the opposite of government actions like Executive Order 6102, which confiscated gold holdings. By requiring Bitcoin redemptions, ETFs reduce the reliance on fiat systems that are easier to control or seize. While this does not eliminate the possibility of government interference, it introduces logistical and operational barriers, making such actions more challenging. In-kind redemptions enhance transparency and align incentives toward greater accountability.
Directionally, a redemption in kind is a move away from confiscation.
Excellent response. But why would Blackrock want the change? What’s their angle?
I was surprised to hear that too. I heard it on a recent pod and I’m trying to find the reference, but don’t have it at my fingertips. Either TIP or TFTC I believe…
If I can find the reference I’ll send it over.