The SEC requires issuers to create a spot Bitcoin ETF using cash, and the application documents must remove all implications of physical redemptions

ChainCatcher news, Fox senior reporter Charles Gasparino posted that the U.S. Securities and Exchange Commission (SEC) is holding a joint conference call with potential spot Bitcoin ETF applicants. Sources indicate that the SEC aims to ensure that cash is used when purchasing the ETF, rather than Bitcoin, and requires issuers to remove any implications of physical redemption from their documents.

This means that issuers must convert their Bitcoin to cash before trading ETF shares. In other words, they cannot use Bitcoin to buy or redeem shares. It is understood that the cash creation route means that ETF issuers must convert Bitcoin to cash in each transaction, which is a longer and more complex process that requires the issuers to buy Bitcoin themselves, rather than through brokerage firms.