SEC Pushing Bitcoin ETFs Toward Less Efficient 'Cash Redemption' Model, Limiting Benefits
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SEC appears to be requiring Bitcoin spot ETF applicants to use a "cash redemption" model rather than alternative "in-kind" models.
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Cash model requires authorized participants to deposit cash equivalent to net asset value to create shares; fund uses cash to buy Bitcoin.
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In-kind model allows deposit of a basket of securities matching the ETF's holdings to create shares. Seen as more efficient.
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Cash model leads to potentially wider spreads, tax inefficiencies but still better than current traditional finance products.
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BlackRock met with SEC to propose a revised in-kind model but may need to use cash model based on latest applicant filings using cash.