The SEC has been busy, meeting with all of the potential issuers of spot Bitcoin ETFs with active applications in December. These meetings have resulted in the universal adoption of a cash creation methodology by those issuers instead of “in kind” transfers, as is typical for other ETFs. Much has been said about this change, ranging from the absurd to the serious. The TLDR, however, is the overall impact will be minimal to investors, relatively meaningful to the issuers and it reflects poorly on the SEC overall.

In order to provide context, it is important to describe the basic structure of Exchange Traded Funds. ETF issuers all engage with a group of Authorized Participants (APs)…

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