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SEC Bitcoin ETF Update Deadline Today: Cash or In-Kind Creation

As the cryptocurrency community awaits potential approval of a Bitcoin (BTC) spot exchange-traded fund (ETF) in the United States in January, today marks an important deadline.

The U.S. Securities and Exchange Commission said last week that Bitcoin ETF spot applicants must file final S-1 amendments by December 29. The regulator also asked them to sign an agreement with an authorized participant (AP) and settle the buyback in cash. model he favors.

The deadline means that on December 29, the community will likely know which Bitcoin ETF depositors out of 14 applicants could be part of the first wave of potential spot BTC ETF approvals, which is largely expected in early January.

According to Eric Balchunas, senior ETF analyst at Bloomberg, many ETF applicants have updated their documents with the cash redemption model. As of December 22, seven applicants had set their filings for cash creation, while the remaining seven included both cash and in-kind creation models in their registration statements.

Locate the statuses of Bitcoin ETF deposits as of December 22, 2023. Source:

Most existing ETFs involve in-kind creation, meaning that when intermediaries want to create new ETF shares, they give companies like BlackRock funds using real assets like Bitcoin.

“And that’s how 90% of how ETFs work is in-kind. Only 10% is cash,” Balchunas said in an interview with Cointelegraph on December 28.

The reason the SEC wants the treasury model for spot Bitcoin ETFs is that it wants to minimize the number of middlemen who have access to actual Bitcoin in the redemption and offering process, the analyst believes. ‘AND F.

“They don’t like the idea of ​​brokers being the middlemen who touch Bitcoin,” Balchunas noted. “Many were going to create unregistered subsidiaries to act in place of actual broker-dealers, but the SEC just didn’t want that,” the ETF analyst said.

The SEC wanted to “close the loop a little more,” Balchunas said, mentioning that he had also heard that regulators were concerned about money laundering. He stated:

“If the only people playing with real Bitcoin are BlackRock and Coinbase, it’s a little more controllable than the Bitcoin you have (…) They just want a more closed system with fewer middlemen touching the real Bitcoin.”

Related: Spot Bitcoin ETF will be a ‘bloodbath’ for crypto exchanges, analyst says

In addition to the liquidity creation preference, ETF applicants must have an AP determined by today, December 29.

“Last I heard, there aren’t a lot of deals signed yet, and I think most of them will be,” Balchunas told Cointelegraph, adding that two large companies that are “probably going to” be the AP for everyone are the trading companies. giants Jane Street and Virtu Financial.

In their most recent Bitcoin ETF amendment filed on December 28, ARK and 21Shares did not specify the name of an AP.

“AP mentioned a ton but didn’t get named. Assuming this will probably come in the very last effective update just before launch. But we still don’t know if they signed a deal,” Balchunas wrote on X.

Additional reporting by Ana Paula Pereira.

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