According to Foresight News, the US Securities and Exchange Commission (SEC) is holding joint conference calls with potential Bitcoin ETF applicants. Sources say the SEC aims to ensure that cash is used when purchasing ETFs, rather than Bitcoin, and requires issuers to remove all implications of physical redemptions from their documents. This means that issuers must convert their Bitcoin into cash before trading ETF shares. In other words, they cannot use Bitcoin to purchase or redeem shares.
The cash creation route implies that ETF issuers must exchange Bitcoin for cash in each transaction, which is a longer and more complex process. This requires issuers to purchase Bitcoin themselves, rather than through broker-dealers.