However, the U.S. Securities and Exchange Commission (SEC) has imposed Bitcoin ETF requirements, which can be said to be a turning point, insisting on cash transactions instead of the standard in-kind redemptions using Bitcoin, potentially increasing costs for retail investors.
According to Fortune, this departure from the Bitcoin ETF requirements is raising eyebrows, considering that in-kind transactions are the standard practice for other ETFs.
The SEC’s decision to bar ETF issues from utilizing Bitcoin for in-kind redemptions, opting for cash transactions instead, diverges from its approval of a gold ETF in 2014, where in-kind transactions involving physical gold bars were considered more efficient.
The SEC‘s rationale behind this stance appears to be unusually rooted in viewing Bitcoin as a novel and potentially manipulable asset. The agency aims to minimize opportunities for self-dealing by market makers and ETF issuers. However, the likelihood of such manipulation remains uncertain, especially considering that a federal appeals court previously rejected this argument, prompting the SEC to lift its block on Bitcoin ETFs.
In a related development, Coinbase, a leading cryptocurrency exchange, plans to appeal the SEC’s rejection of its proposal for a new digital asset framework.
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