SEC Provides Guidance on Spot Bitcoin ETFs, Encourages Cash Creation Method

SEC's Advice Regarding Spot Bitcoin ETFs

The Securities and Exchange Commission (SEC) has reportedly provided specific guidance to exchanges seeking to list and trade spot bitcoin exchange-traded funds (ETFs) on what they should do next. This development brings optimism for spot bitcoin ETF approval by the SEC.

Engagement with Exchanges

According to Bloomberg ETF analyst Eric Balchunas, the SEC's Division of Trading and Markets has engaged in discussions with exchanges. The SEC has advised them to use the cash creation method instead of the in-kind method for spot bitcoin ETFs. Exchanges have been asked to file amendments reflecting this change in the next couple of weeks.

Why Cash Creation Makes Sense

The use of cash creation for spot bitcoin ETFs is seen as a positive step by many in the crypto space. Balchunas suggests that cash creation puts the onus on issuers to transact in bitcoin, eliminating the need for broker-dealers to use unregistered subsidiaries or third-party firms. This method provides fewer limitations overall.

Positive Progress

Marshall Beard, Chief Strategy Officer at crypto exchange Gemini, sees the SEC's guidance as real progress. He notes that the Canadian spot ETFs have been using the cash create model for years. The clarity provided by the SEC's advice on the cash vs in-kind debate is seen as a positive development.

Efficiency of In-Kind Creates

While the SEC's cash creation advice is viewed positively by some, others argue that in-kind creates are more efficient. Gabor Gurbacs, strategy advisor at Vaneck, believes that the SEC's advice shows a lack of understanding and acceptance of the best aspects of ETFs and bitcoin. He emphasizes that in-kind creates are simply much more efficient.

Issuer's Perspective

Balchunas acknowledges the SEC's point of view in favor of cash creates but highlights that from an investor's perspective, in-kind creates may be better in terms of the spread and taxation. He suggests that some issuers may push for the in-kind process and could potentially engage with the SEC staff to succeed in their efforts.

SEC Chairman's Statement

SEC Chairman Gary Gensler has stated that the securities regulator is considering eight to ten spot bitcoin ETF applications. It is expected that the SEC will approve multiple spot bitcoin ETFs at once in early 2022.

In conclusion, the SEC's guidance on using cash creates for spot bitcoin ETFs is seen as a significant step forward. While there are differing opinions on the efficiency of cash vs in-kind creates, the overall sentiment is that this development brings clarity to the approval process and indicates progress in the path towards spot bitcoin ETFs.

Frequently Asked Questions

Can I purchase gold with my self directed IRA?

However, gold can only be purchased with your self-directed IRA. To do so, you must first open a brokerage account at TD Ameritrade. If you have an existing retirement account, you can transfer funds to another one.

The IRS allows individuals to contribute as high as $5,500 ($6,500 if they are married and jointly) to a traditional IRA. Individuals can contribute up $1,000 per annum ($2,000 if they are married and jointly) directly to a Roth IRA.

If you do decide to invest in gold, you'll want to consider purchasing physical bullion rather than investing in futures contracts. Futures contract are financial instruments that depend on the gold price. They allow you to speculate on future prices without owning the metal itself. However, physical bullion is real gold or silver bars you can hold in your hands.

What does gold do as an investment?

The supply and the demand for gold determine how much gold is worth. Interest rates are also a factor.

Due to their limited supply, gold prices fluctuate. Physical gold is not always in stock.

How much should your IRA include precious metals

You should remember that precious metals are not only for the wealthy. You don't have to be rich to invest in them. In fact, there are many ways to make money from gold and silver investments without spending much money.

You might consider purchasing physical coins, such as bullion bars and rounds. Also, you could buy shares in companies producing precious metals. You may also be interested in an IRA transfer program offered by your retirement provider.

You can still get benefits from precious metals regardless of what choice you make. They are not stocks but offer long-term growth.

And, unlike traditional investments, their prices tend to rise over time. If you decide to make a sale of your investment in the future, you will likely realize more profit than with traditional investments.

What is the value of a gold IRA

Many benefits come with a gold IRA. It's an investment vehicle that lets you diversify your portfolio. You control how much money goes into each account and when it's withdrawn.

You also have the option to transfer funds from other retirement plans into a IRA. If you are planning to retire early, this makes it easy to transition.

The best thing about investing in gold IRAs is that you don’t need any special skills. They're available at most banks and brokerage firms. You don't have to worry about penalties or fees when withdrawing money.

However, there are still some drawbacks. The volatility of gold has been a hallmark of its history. Understanding why you invest in gold is crucial. Are you seeking safety or growth? Are you looking for growth or insurance? Only when you are clear about the facts will you be able take an informed decision.

You might want to buy more gold if you intend to keep your gold IRA for a long time. A single ounce will not be sufficient to meet all your requirements. Depending upon what you plan to do, you could need several ounces.

You don't have to buy a lot of gold if your goal is to sell it. You can even live with just one ounce. But you won't be able to buy anything else with those funds.

What precious metal is best for investing?

Answering this question will depend on your willingness to take some risk and the return you seek. Although gold has traditionally been considered a safe investment choice, it may not be the most profitable. You might not want to invest in gold if you're looking for quick returns. If you have the patience to wait, then you might consider investing in silver.

If you don’t desire to become rich quickly, gold may be your best option. Silver might be a better investment option if steady returns are desired over a long period of time.


  • If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (
  • This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (
  • Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (
  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (

External Links

How To

Gold Roth IRA guidelines

The best way to invest for retirement is by starting early. It is best to start saving for retirement as soon you can (typically at age 50). You must contribute enough each year to ensure that you have adequate growth.

You may also wish to take advantage of tax-free investments such as a SIMPLE IRA, SEP IRA, and traditional 401(k). These savings vehicles allow you the freedom to contribute without having to pay tax on your earnings until they are withdrawn. They are a great option for those who do not have access to employer matching money.

It's important to save regularly and over time. You may not be eligible for any tax benefits if your contribution is less than the maximum allowed.

By: Kevin Helms
Title: SEC Provides Guidance on Spot Bitcoin ETFs, Encourages Cash Creation Method
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Published Date: Sun, 19 Nov 2023 01:00:20 +0000

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