Bloomberg ETF analyst Eric explains the difference between physically or cash settled Bitcoin spot BTC.

BlockBeats News, December 14th: Eric Balchunas, an ETF analyst at Bloomberg, replied to a question on social media about the difference between physically-backed and cash-backed Bitcoin ETFs, saying that when there is excess demand for Bitcoin ETFs, authorized participants (APs) will need to create new ETF shares. They can provide cash to the ETF issuer in exchange for new shares (which the issuer then uses to buy BTC), or they can provide BTC to the issuer in exchange for shares. In either case, the new ETF shares are equivalent to new BTC purchases. The reason why the SEC wants ETFs to be only cash-backed is because it means that only the ETF issuer can handle BTC, not the intermediaries (registered brokers cannot). They may also be unwilling to let unregistered broker-dealer subsidiaries handle any part of it (because they are not registered). However, cash-backed Bitcoin ETFs are not ideal and undermine a major advantage of the ETF structure. But it's better than nothing, and we hope they can soon find a physically-backed solution.