Unchained

Why the SEC May Want Cash Creation of Spot Bitcoin ETFs - Ep. 582

Dec 15, 2023

James Seyffart, a research analyst at Bloomberg Intelligence specializing in crypto assets and ETFs, discusses the excitement surrounding the anticipated approval of spot Bitcoin ETFs. He highlights the pivotal issue of cash versus in-kind creation models and their implications for the market. Seyffart predicts ETF listings soon and analyzes how an approval might impact major players like Grayscale. He also shares insights into the SEC's evolving stance on Ethereum, signaling a potential shift in regulatory perspectives for cryptocurrencies.

44:54

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James Seyffart

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Quick takeaways

The final issues in the approval of spot bitcoin ETFs involve the battle over in-kind vs. cash creation and redemptions.

The approval of ETFs could have a significant impact on Grayscale, which manages the Grayscale Bitcoin Trust.

The SEC has seemingly given up on classifying Ethereum as a security.

Deep dives

Security incident with compromise of Ledger's Connect Kit

A significant security incident occurred with the compromise of Ledger's Connect Kit. Hackers injected malicious code into the GitHub library of the Connect Kit, leading to unauthorized draining of funds from users' wallets. Ledger responded promptly and deactivated the malicious code. The incident affected multiple Dapps that used the Connect Kit, causing panic and confusion in the crypto community.

Intro

2min

Preparing for the Launch of Spot Bitcoin ETFs: Insights and Expectations

3min

Understanding Spot Bitcoin ETF Creation Processes and Their Implications

5min

Navigating Bitcoin ETF Cash Structures

9min

Navigating the Bitcoin ETF Landscape

14min

Cryptocurrency Regulation and the Future of Bitcoin ETFs

3min

Crypto Under Fire: Legal Woes and Security Breaches

9min

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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

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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

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Unchained

Why the SEC May Want Cash Creation of Spot Bitcoin ETFs - Ep. 582

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Security incident with compromise of Ledger's Connect Kit

New rules allow companies to reflect crypto holdings on balance sheets

FTX objects to $24 billion tax claim from the IRS

KuCoin settles with the New York Attorney General's office

Binance intensifies legal defense against the SEC lawsuit

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