As various asset management companies have submitted amendment filings for Bitcoin spot ETFs supported only by “cash” mode, getting ready for 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 the ETF emphasize “Made in the USA”?
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Arthur Hayes: The Key is Who Can Buy and Sell Bitcoin
BlackRock and others have changed to cash mode ETFs to comply with the SEC
Arthur Hayes pointed out that the physical mode is simpler and cleaner for funds because they don’t have to direct BTC trading. However, this also means that BTC can be purchased from anywhere.
Cash is more complex, but it gives funds a lot of power. The fund trading desk will have significant power to guide a large amount of BTC trading flow. Considering the spirit of the “Made in the USA” political era, Hayes bets that only brokers and exchanges with political backgrounds will be used as counterparties for purchasing the fund’s BTC.
He also proposed that because ETFs have trading time restrictions, the creation/redemption window will also close at 4 pm US Eastern Time on Friday. 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 this will bring lucrative arbitrage opportunities for those who can trade on BTC exchanges in both the US and non-US.
With the Christmas holiday approaching, asset institutions have been meeting with SEC officials intensively to discuss the details of Bitcoin spot ETFs, and they have also been submitting new amendment filings one after another, including BlackRock, Valkyrie, Bitwise, and Invesco, all of which have proposed amendments that only allow creation and redemption in cash. It seems that everyone wants to “seek to have it first, then make it better” and take the lead in the next approval window in January.
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Illustration of ETF | How is the SEC’s preferred ETF cash mode different from BlackRock’s physical Bitcoin ETF?
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Arthur Hayes
BTC
Bitcoin spot ETF
Further reading
CryptoQuant analysis: Short-term pullback risk for Bitcoin, expected to reach $160,000 in 2024
Approval in January is inevitable? Bitcoin spot ETF has become BlackRock’s “key priority”