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Expert Analyst Predicts SEC Will Prioritize Bitcoin ETFs Focusing on Cash Creation

Expert Analyst Predicts SEC Will Prioritize Bitcoin ETFs Focusing on Cash Creation

A Potential Preference for Cash Create Redemption in Spot Bitcoin ETF Approvals, says Analyst

A Senior Bloomberg ETF analyst suggests that the Securities and Exchange Commission (SEC) may have a preference for spot Bitcoin ETFs with a cash create redemption structure. However, this has not been confirmed by the SEC.

Cash Create vs. In-Kind Redemption

The cash create redemption model requires issuers to hold the dollar equivalent of every Bitcoin offered in the ETF, while the in-kind model only mandates holding BTC with a trusted custodian. Experts argue that the in-kind option would benefit investors more due to lower costs and better tax consequences.

BlackRock Advocating for In-Kind Redemptions

BlackRock, a major player on Wall Street, is reportedly pushing for in-kind redemptions. However, several issuers are ready to offer their ETFs under the cash create model if necessary.

Spot BTC ETF Approvals Under Review

The SEC is currently reviewing filings from 13 applicants, including Grayscale’s bid to convert its Bitcoin Trust into an ETF. Industry experts predict that approvals could come in January 2024, considering ongoing conversations between the SEC and filers.

No Timeline Disclosed by SEC Chairman

SEC Chairman Gary Gensler has not provided a specific timeline for approval but confirmed that applications are being reviewed.

In-Kind redemption model vs In-Cash redemption model for spot BTC ETF | Source: BlackRock iShares filing

Hot Take: SEC May Favor Cash Create Redemption Model for Spot Bitcoin ETFs

A Senior Bloomberg ETF analyst has speculated that the SEC may lean towards approving spot Bitcoin ETFs with a cash create redemption structure. While this remains unconfirmed, the choice between cash create and in-kind redemption models has significant implications for issuers and investors. The SEC’s decision could impact operating costs, tax consequences, and the overall accessibility of Bitcoin ETFs. As the SEC reviews multiple filings, including Grayscale’s bid, anticipation builds for potential approvals in January 2024. However, SEC Chairman Gary Gensler has not provided a specific timeline for approval. The industry eagerly awaits further updates on the regulatory landscape for Bitcoin ETFs.

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Expert Analyst Predicts SEC Will Prioritize Bitcoin ETFs Focusing on Cash Creation