January 10th 2024 is the day the SEC will approve a raft of spot bitcoin ETF’s. Are you ready, do you have enough bitcoin?
@BritishHodlSo the SEC is choosing to require the #Bitcoin Spot ETF’s to use what’s known as “Cash Creates” mechanism.
This is BY FAR the best solution over the “in-kind” option to increase simplicity and increase regulatory oversight over un-regulata-ble worldwide #Bitcoin market.
As usual the Doom & Gloom Boomers are out in force citing “manipulation” when actually this method - the “cash creates” method as preferred by @GaryGensler is actually the one that’s better.
Imaging this, you have a sweet jar where you save your sweets, and your sweets are truly high in quality.
If you were going to maintain the quality of sweets in your jar, would you prefer that a) someone give you money, you go buy the specific sweets and put them in the jar for safe keeping. Or b) anyone can put sweets in the jar with you only being able to eye ball it as they’re putting them in your jar?
Of-course it’s A.
Well, that’s what cash creates is, it means as shares are bought, the authorised party gives the ETF provider cash, that provider is now responsible for acquiring the #Bitcoin using the properly regulated US channels - ie through @coinbase and then secure it for the shareholders.
Doing it the other way, ETF’s could go to OTC desks anywhere else in the world and acquire #Bitcoin from unregulated markets and try dump it into the ETF.
This way, all steps are US regulated.
The other way works with stocks and treasuries, which are all listed under US law, or some governable law, that’s not the case with #Bitcoin being a worldwide market.
It opens up a little more potential volatility in daily trading as the ETF is actively trading in the market as and when it receives cash.
It also allows for a time gap between cash insertion and #Bitcoin acquired.
This is normal with any ETF and the risks/volatility will be mitigated as per the prospectus of the ETF.
It’s amazing how far Doom & Gloom Boomers will go - I don’t like the @SECGov any more than the next #Bitcoin -er but this move is a move in the right direction to minimise fraud and manipulation in the market & keep everything governable.
Wake up and stop reading Doom & Gloom Boomer tweets.
https://x.com/britishhodl/status/1725632755772305687
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