1 year ago
Arthur Hayes, the co-founder and erstwhile CEO of BitMEX, highlighted the imaginable “juicy arbitrage opportunities” that would look for investors who commercialized connected some American and non-American crypto exchanges owed to the SEC’s insistence that applicants grip funds successful a circumstantial way.
In a Dec. 21 post connected X (formerly Twitter), Hayes explained that an ETF utilizing in-kind transactions would beryllium a simpler and cleaner option, arsenic it wouldn’t straight power Bitcoin trades due to the fact that the plus tin beryllium sourced from anywhere.
Usually, accepted ETFs facilitate “in-kind” transactions, permitting marketplace makers to swap the underlying plus for the ETF shares directly. In contrast, the “cash create” method necessitates issuers to speech currency for the ETF shares successful each transaction.
However, helium pointed retired that a cash-based ETF poses complexities due to the fact that “it hands large powerfulness to the fund.”
According to Hayes, this setup could pb to imaginable misuse of authorization by the ETFs arsenic determination is the likelihood of politically connected brokers and exchanges being favored successful the procurement of Bitcoin for the money owed to the prevailing “made successful America” governmental sentiment.
He said:
“Cash is much analyzable but it hands large powerfulness to the fund. The money trading table volition person bigly powerfulness to nonstop what should beryllium ample trading flows of BTC. Given the ‘made successful America’ governmental zeitgeist, you tin stake lone politically connected brokers and exchanges volition beryllium utilized arsenic counterparties to bargain and BTC for the fund.”
Reports revealed that the fiscal regulator prefers a cash-based strategy to forestall fraud and restrict broker-dealers similar Robinhood and Fidelity from straight trading spot Bitcoin. This measurement is to code concerns regarding imaginable marketplace manipulation and illicit activities.
Meanwhile, respective Bitcoin ETF applicants person been amending their applications to comply with the SEC’s demands of moving towards a cash-based attack implicit the past respective months.
The station Arthur Hayes sees caller arbitrage opportunities successful SEC’s crypto ETF concerns appeared archetypal connected CryptoSlate.
English (US) 