Nexo

Start Earning Up to 16% Interest Automatically

Learn More
Home » News » SEC Advises Bitcoin ETF Firms on Cash Creations to Address Broker Concerns

SEC Advises Bitcoin ETF Firms on Cash Creations to Address Broker Concerns

by

Cash creation appears to be one solution the SEC is comfortable with to address concerns around broker-dealers directly handling Bitcoin.

SEC Advises Bitcoin ETF Firms on Cash Creations to Address Broker Concerns

Share this article

The Securities and Exchange Commission (SEC) has reportedly advised companies seeking to launch Bitcoin exchange-traded funds (ETFs) to amend their filings to switch to cash creations rather than in-kind creations, according to Bloomberg ETF analyst Eric Balchunas today.

To balance supply and demand, ETFs can create or redeem shares either in-kind, by exchanging Bitcoin for ETF shares, or with cash, by buying or selling Bitcoin on the open market.

Balchunas stated that the SEC’s Division of Trading and Markets spoke with exchanges this week regarding their Bitcoin ETF filings and recommended submitting amendments within the next couple of weeks specifying cash creations instead of in-kind.

The rationale is that broker-dealers currently cannot transact in Bitcoin directly due to regulatory restrictions, so cash creations place the onus on the ETF issuer to deal in Bitcoin. This prevents broker-dealers from needing to utilize unregistered subsidiaries or third parties to handle Bitcoin transactions. Overall, cash creation provides fewer limitations for broker-dealers.

Most of the recent Bitcoin ETF applicants had proposed utilizing in-kind creations. According to Balchunas, only 2-3 filers had planned for cash creations initially. This latest guidance from the SEC will likely require many filers to adjust their proposals and submit amendments to avoid potential delays in the approval process.

While this update does not directly impact the estimated 90% odds of a Bitcoin ETF being approved, it does signal that the process is advancing as the SEC works through logistical issues surrounding Bitcoin ETFs.

Share this article

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

Crypto Briefing may augment articles with AI-generated content created by Crypto Briefing’s own proprietary AI platform. We use AI as a tool to deliver fast, valuable and actionable information without losing the insight - and oversight - of experienced crypto natives. All AI augmented content is carefully reviewed, including for factural accuracy, by our editors and writers, and always draws from multiple primary and secondary sources when available to create our stories and articles.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.