By Susie Violet Ward · Forbes · 31 December 2023
In December 2023, Hong Kong’s Securities and Futures Commission set out guidelines allowing spot bitcoin ETFs to use both “in-kind” and cash creation models, while the US approach under consideration was cash-based. The article explains that in-kind creation lets investors exchange bitcoin for ETF shares and redeem shares for bitcoin, which appeals to existing holders, while cash creation suits traditional investors who do not hold bitcoin.
In the US, the final deadline for issuers to submit amendments had passed, and Bitwise had disclosed a $200 million seed investment in its proposed fund, compared with BlackRock’s $10 million. The article argues that in-kind redemptions could reduce the amount of bitcoin available on exchanges and, combined with the 2024 halving, tighten supply. It also notes that a large share of crypto trading volume came from Asia.