Grayscale Shifts to Cash Model for Spot Bitcoin ETF Amid Cautionary Notes
Grayscale Investments has opted for the cash creation model over the in-kind model for its proposed spot bitcoin exchange-traded fund (ETF), as outlined in the second amendment to its registration statement with the U.S. Securities and Exchange Commission (SEC) on Dec. 26.
While Grayscale acknowledges the lack of regulatory guidance on bitcoin holdings by registered broker-dealers, it emphasizes potential operational inefficiencies and adverse consequences tied to a solely cash-based ETF. The filing underscores the novel nature of this approach and expresses concerns about the arbitrage mechanism’s potential inefficiency, possibly leading to significant premiums or discounts. Grayscale’s move follows the SEC’s preference for the cash creation model, impacting several spot bitcoin ETF applicants, including Grayscale and Blackrock.
The development coincides with Grayscale’s announcement of Barry Silbert’s resignation from its board of directors, and the SEC’s Dec. 29 deadline for amended filings from spot bitcoin ETF applicants.
Clever Robot News Desk 29th December 2023
