Arthur Hayes: Bitcoin Spot ETF Must Also Be "Made in America", Who Can Buy and Sell Bitcoin is Key
As various asset management companies submit amendment filings for Bitcoin spot ETFs supported only by "cash" mode, eagerly awaiting approval in January, BitMex founder Arthur Hayes has also expressed his opinion, claiming that the cash mode is more complex. He even bets that only brokers and exchanges with political backgrounds can be counterparties for BTC trading. Does even ETF need to emphasize "Made in the USA"?
#BitcoinETFs cash or in-kind creation what's important?
In-kind is simpler and cleaner for the fund, as the fund doesn't have to direct the trading of $BTC, but it means $BTC can be sourced from anywhere.
Cash is more complicated but it hands big power to the fund. The fund…
— Arthur Hayes (@CryptoHayes) December 21, 2023
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Arthur Hayes: The Key is Who Can Buy and Sell Bitcoin
Arthur Hayes points out that the physical model is simpler and cleaner for funds because they don't have to direct BTC transactions, but it also means that BTC can be purchased from anywhere.
Cash is more complex, but it gives funds significant power. Fund trading desks will have immense power to direct a large volume of BTC transactions. Considering the spirit of the "Made in America" political era, Hayes bets:
Only brokers and exchanges with political backgrounds will be used as counterparties to purchase BTC for the fund.
He also proposes that because ETFs have trading time restrictions, with creation/redemption windows closing on Friday afternoons in the US, will there be changes in market microstructure? Will price discovery shift from the East to the West? These will be the details he will observe in the future.
And he believes that this will bring lucrative arbitrage opportunities for those who can trade on both US and non-US BTC exchanges.
BlackRock and Others Comply with SEC to Switch to Cash Mode ETFs
With the Christmas holiday approaching, various asset institutions are not only meeting with SEC officials to discuss the details of Bitcoin spot ETFs, but also submitting new S-1 amendments one after another, including BlackRock, Valkyrie, Bitwise, and Invesco. They have proposed amendments that only allow creation and redemption in cash. It seems that everyone wants to "seek first to have, then to improve" and be the first to grab the head start in the next approval window in January.
Infographic: SEC's preferred cash mode for ETFs, how is it different from BlackRock's physical Bitcoin ETF?