Monday, 17 June 2024
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The top five frequently asked questions on the approval of spot ETFs

  • Grayscale Investment has changed its settlement strategy in light of the most recent approval of the Bitcoin ETF.
  • The investment company consented to modify its ETF application to allow for a “cash” settlement.
  • Investors who own spot Bitcoin ETFs have two ways to get their money back: cash or in-kind.

Since June 2023, exchange-traded funds, or ETFs, focused primarily on bitcoin have driven the cryptocurrency markets. On the other hand, Grayscale Investment has changed its settlement strategy in light of the most recent approval of the Bitcoin ETF.

Following the statement from the US Securities and Exchange Commission (SEC), the investment company consented to modify its ETF application to allow for a “cash” settlement.

Approval of spot ETFs

With the resignations of President Mark Murphy and founder Barry Silbert from their director roles, Grayscale Investments experienced significant board changes.

With effect from January 1, 2024, Silbert’s DCG CFO Mark Shifke assumes the chairmanship, and two new board members, Edward McGee and Matthew Kummell, suggest that the massive cryptocurrency company may make some strategic changes.

Investors who own spot Bitcoin ETFs have two ways to get their money back: cash or in-kind. The first option gives the investor direct ownership of the underlying asset, but it also comes with requirements for maintaining a cryptocurrency wallet and being aware of security procedures.

The SEC has set two deadlines for applicants seeking approval for their proposals to create exchange-traded funds (ETFs): December 29, 2023, is the deadline for final changes to these filings, and January 10, 2024, is the potential deadline for the first approval of a spot Bitcoin ETF.

By this date, the applications could be approved or rejected by the SEC, or the review time could be extended. Because it has various benefits over owning the underlying digital asset directly, a Bitcoin ETF is significant. It facilitates the buying and storing of Bitcoin, making it simpler for newcomers and non-crypto experts.

Furthermore, while conventional financial laws and safeguards are applicable, Bitcoin ETFs offer safety and regulation in contrast to unregulated cryptocurrency exchanges. ETFs are also more flexible and cheaper since they allow investors to invest in lower amounts and provide increased transparency.

If a US spot Bitcoin ETF is approved, the market for cryptocurrency exchange-traded funds (ETPs) might grow dramatically, drawing in more institutional money and elevating the profile of Bitcoin.

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