The Point of Contention: Cash-Only Requirement for Bitcoin ETPs
Gabor Gurbacs, the director of Digital Assets Strategy at Vaneck, has expressed his dissatisfaction with the U.S. Securities and Exchange Commission’s (SEC) requirement for spot bitcoin exchange-traded fund (ETF) issuers to use cash instead of the in-kind model for their crypto exchange-traded products (ETPs). According to Gurbacs, this restriction is unnecessary and he referred to it as “Kabuki theatre.”
He made a strong case against the cash-only requirement by highlighting that publicly listed companies already hold billions of dollars worth of bitcoin on their balance sheets, which include various sources such as trading platforms and mining.
A Different Approach: Hong Kong’s Open-Mindedness
Gurbacs commended Hong Kong for having a more open-minded stance on the matter. He praised the Hong Kong Securities and Futures Commission (SFC) for allowing both the cash and in-kind models for spot bitcoin ETFs. He believes that relaxing the rules will lead to a competitive advantage and attract capital.
Currently, there are 13 spot bitcoin ETF applications being reviewed by the SEC, including one from Vaneck. The SEC has been in discussions with different issuers and has been pushing for the cash creation method. However, Gurbacs predicts that this requirement will not last long, as in-kind creations and redemptions are more efficient and better for investors. He believes that issuers will fight for the inclusion of the in-kind model.
Hot Take: U.S. SEC’s Requirement Comes Under Fire
The SEC’s cash-only requirement for spot bitcoin ETPs has faced criticism from Gabor Gurbacs, the director of Digital Assets Strategy at Vaneck. He argues that the restriction is unnecessary, as publicly listed companies already hold billions of dollars worth of bitcoin. Gurbacs praises Hong Kong for being more open-minded, allowing both cash and in-kind models for spot bitcoin ETFs. He believes that relaxing the rules will give issuers a competitive advantage. Despite the SEC pushing for the cash creation method, Gurbacs predicts that in-kind creations will prevail due to their efficiency and investor benefits.
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