Why the SEC May Want Cash Creation of Spot Bitcoin ETFs - Ep. 582
Unchained
Intro
This chapter explores issuers' hesitance to buy and sell Bitcoin directly, citing the operational difficulties associated with direct trading. The host also sets the stage for the episode's theme while recognizing the podcast's sponsors.
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The long-awaited approval of a spot bitcoin ETF looks to be mere weeks away, and Bloomberg ETF analyst James Seyffart joins Unchained to discuss the final issues and considerations, especially the battle over whether the new funds will feature in-kind vs. cash creation and redemptions, which appears to be one of the last main sticking points in negotiations between the SEC and fund companies. He also discusses the specific impact of an ETF approval on Grayscale, which runs the $26.6 billion Grayscale Bitcoin Trust, and why he thinks the SEC has thrown in the towel on trying to classify Ethereum as a security.
Show highlights:
- Why James views the multitude of potential issuers meeting with the SEC as a positive sign for the future of ETFs
- When James anticipates the ETFs will actually be listed on exchanges, which differs from their approval dates
- The crucial differences between in-kind versus cash creation and redemptions in ETFs and their impact on market dynamics
- How the choice of in-kind or cash creation and redemptions influences the overall cost structure of these financial products
- Whether the current actions of ETF issuers suggest a "bending the knee" approach to the SEC's preference for cash creations and redemptions
- How the selected ETF model will specifically impact Grayscale and the future of its GBTC offering
- The potential strategies behind BlackRock's private trust, especially in terms of integrating its Bitcoin holdings into its prospective ETF
- Why James holds a more cautious outlook for the approval of an Ethereum spot ETF compared to his confidence in Bitcoin ETFs
Thank you to our sponsors!
Guest
- James Seyffart, Research analyst at Bloomberg Intelligence
- Previous appearances on Unchained:
- Why It Looks Like BlackRock Could Win America’s First Spot Bitcoin ETF
- Why a Spot Bitcoin ETF Will Probably Launch No Later Than January 10
Links
- Previous coverage on spot Bitcoin ETFs:
- How Much Money Will Flow Into Bitcoin ETFs? Here’s One Projection
- Why a Spot Bitcoin ETF Will Probably Launch No Later Than January 10
- Why It Looks Like BlackRock Could Win America’s First Spot Bitcoin ETF
- The Chopping Block: Are We Back? The ‘Low IQ’ Response to the Potential Spot Bitcoin ETF
- Unchained:
- Bitcoin ETFs Explained: What Are They & How Do They Work?
- BlackRock Updates Bitcoin ETF Filing to Make Access Easier for Wall Street Banks
- Understanding the ETF creation and redemption mechanism
- Nate Geraci’s tweet on in-kind/cash
- James comments “the people want in-kind”
- James: “I think everyone is gonna have to bend the knee to cash creates and redeems.”
- Eric Balchunas suggests the SEC is only letting cash-create ETFs launch initially
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