TechFlow reported that a finance professor from Georgetown University urged the U.S. Securities and Exchange Commission (SEC) to avoid micromanaging the creation/redemption process of spot Bitcoin exchange-traded funds (ETFs). While the SEC has proposed a cash-based creation method, applicants such as BlackRock and Fidelity advocate for a physically-backed creation approach.
The professor stated: "Now that the Commission appears satisfied with allowing spot Bitcoin ETFs to trade in the United States, it should not waste this positive development by forcing suboptimal products—those using only cash creation/redemption—into the market. If ETFs do not have to pay for Bitcoin transactions, costs to ETF shareholders will be reduced. Moreover, there is a time cost associated with the risk of Bitcoin price fluctuations between the time the net asset value for creation/redemption is established and the time Bitcoin transactions occur. Given Bitcoin’s high volatility, this is a real risk. There is no reason to force shareholders to bear this execution risk unnecessarily."
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