Bitcoin ETFs: SEC Focuses on “Cash Create” as Hashdex and Ark 21Shares Modify Strategies

Hashdex, a prominent player in the Bitcoin ETF market, has made a significant change in its application approach by selecting BitGo as its custodian. This decision comes in response to recent directives from the U.S. Securities and Exchange Commission (SEC) regarding the framework of Bitcoin ETFs.

Hashdex’s partnership with BitGo for the safekeeping of its cryptocurrency assets sets it apart from others in the industry. While many competitors choose Coinbase or opt for self-custody like Fidelity, Hashdex’s decision to work with BitGo represents a fresh direction in the ETF space.

The SEC has been in talks with various Bitcoin ETF applicants, including major players like BlackRock, Valkyrie, Fidelity, Grayscale, and Ark. Through these consultations, the SEC has emphasized the importance of incorporating the “Cash Create” model in ETF proposals, replacing the previously favored “in-kind redemptions.” Applicants were required to update their applications by December 29 to align with this new model.

Responding to the SEC’s recommendations, Ark 21Shares has modified its S-1 form to integrate the “Cash Create” model. While being the first to adopt this model doesn’t guarantee an advantage, Ark 21Shares is hopeful for a positive response from the SEC by the decision date of January 10, 2024.

The Bitcoin ETF sector is witnessing notable changes as a result of regulatory updates and strategic decisions by major players. Ark 21Shares’ shift towards the “Cash Create” model reflects the evolving landscape of the industry. With key regulatory decisions expected by January 10, 2024, the cryptocurrency investment strategies are on the verge of significant transformations.