August 9, 2024 (NO COMMENTS)

Mismatch between cash and crypto settlement cycles creates pre-funding challenge

 

Crypto markets are grappling with the cost of funding bitcoin purchases by cash-settled exchange-traded funds (ETFs) that operate on a T+1 cycle.    The problem is a symptom of the mismatched settlement cycles for cash and cryptocurrencies. When investor demand for a bitcoin ETF rises, firms called authorised participants (APs) – generally banks and high-speed trading firms such as JP Morgan and Jane Street – create more shares by sending cash to the fund manager, who purchases the underlying