Gabor Gurbacs, the Director of Digital Assets Strategy at asset management firm Vaneck, has criticized the U.S. Securities and Exchange Commission (SEC) for its cash-only requirement for spot bitcoin exchange-traded funds (ETFs). In a post on social media platform X, Gurbacs called the requirement "nonsense" and stated that it should not restrict bitcoin ETFs to cash only.
Cash-Only Requirement for Bitcoin ETPs
Gurbacs expressed his disagreement with the SEC's cash-only requirement for bitcoin exchange-traded products (ETPs) in a recent post on social media. He referred to the requirement as "Kabuki theatre" and argued that it was unnecessary to restrict bitcoin ETPs to cash only.
He further pointed out that publicly listed companies already hold billions of dollars worth of bitcoin on their balance sheets. These companies have acquired bitcoin through various means, including transfers from trading platforms and mining. Gurbacs suggested that given the existing holdings of bitcoin by public companies, it would be more efficient and beneficial for investors to allow in-kind creations and redemptions for bitcoin ETFs.
Hong Kong's Approach to Bitcoin ETFs
Gurbacs also praised Hong Kong for its more open-minded approach to bitcoin ETFs. He contrasted the SEC's cash-only requirement with Hong Kong's decision to allow both the cash and in-kind models for spot bitcoin ETFs. Gurbacs stated that this difference in regulatory approach could give Hong Kong a capital and competitive advantage in the emerging market of bitcoin ETFs.
This week, the Hong Kong Securities and Futures Commission (SFC) published rules for funds to launch spot bitcoin ETFs using both cash and in-kind methods. This move further highlighted the divergence in regulatory approaches between the United States and Hong Kong.
SEC's Consideration of Bitcoin ETFs
The SEC is currently reviewing 13 spot bitcoin ETF applications, including one from Vaneck. The securities regulator has been holding meetings with various issuers, urging them to use the cash creation method if they want their ETFs to be considered in the initial batch of spot bitcoin ETF decisions.
Gurbacs expressed his belief that the cash-only requirement would not hold out for long, given that public companies already hold bitcoin from various sources. He argued that in-kind creations and redemptions are more efficient and better for investors, and he predicted that issuers would fight for the inclusion of the in-kind model in bitcoin ETFs.
Gabor Gurbacs, the Director of Digital Assets Strategy at Vaneck, has criticized the SEC's cash-only requirement for spot bitcoin ETFs. He believes that it is unnecessary to restrict bitcoin ETPs to cash only and argues that in-kind creations and redemptions would be more efficient and beneficial for investors. Gurbacs also praised Hong Kong for allowing both cash and in-kind models for bitcoin ETFs, suggesting that this could give Hong Kong a competitive advantage in the emerging market of bitcoin ETFs.
What are your thoughts on Gabor Gurbacs' statements? Let us know in the comments section below.
Frequently Asked Questions
Can I purchase gold with my self directed IRA?
Although you can buy gold using your self-directed IRA account, you will need to open an account at a brokerage like TD Ameritrade. Transfer funds from an existing retirement account are also possible.
The IRS allows individuals contributing up to $5.500 each ($6,500 if married, filing jointly) into a traditional IRA. Individuals can contribute as much as $1,000 per year ($2,000 if married filing jointly) to a Roth IRA.
If you do decide to invest in gold, you'll want to consider purchasing physical bullion rather than investing in futures contracts. Futures contract are financial instruments that depend on the gold price. These financial instruments allow you to speculate about future prices without actually owning the metal. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
How much should I contribute to my Roth IRA account?
Roth IRAs are retirement accounts that allow you to withdraw your money tax-free. You cannot withdraw funds from these accounts until you reach 59 1/2. However, if your goal is to withdraw funds before that time, there are certain rules you must observe. First, you cannot touch your principal (the original amount deposited). This means that regardless of how much you contribute to an account, you cannot take out any more than you initially contributed. If you decide to withdraw more money than what you contributed initially, you will need to pay taxes.
The second rule states that income taxes must be paid before you can withdraw earnings. You will pay income taxes when you withdraw your earnings. Consider, for instance, that you contribute $5,000 per year to your Roth IRA. Let's further assume you earn $10,000 annually after contributing. The federal income tax on your earnings would amount to $3,500. That leaves you with only $6,500 left. You can only take out what you originally contributed.
So, if you were to take out $4,000 of your earnings, you'd still owe taxes on the remaining $1,500. You'd also lose half the earnings that you took out, as they would be subject to a second 50% tax (half of 40%). So even though you received $7,000 in Roth IRA contributions, you only received $4,000.
There are two types if Roth IRAs: Roth and Traditional. A traditional IRA allows for you to deduct pretax contributions of your taxable income. Your traditional IRA can be used to withdraw your balance and interest when you are retired. There is no limit on how much you can withdraw from a traditional IRA.
Roth IRAs don't allow you deduct contributions. After you have retired, the full amount of your contributions and accrued interest can be withdrawn. There is no minimum withdrawal requirement, unlike traditional IRAs. You don't need to wait until your 70 1/2 year old age before you can withdraw your contribution.
How does gold perform as an investment?
Gold's price fluctuates depending on the supply and demand. It is also affected by interest rates.
Due to limited supplies, gold prices are subject to volatility. In addition, there is a risk associated with owning physical gold because you have to store it somewhere.
Should you Invest In Gold For Retirement?
The answer depends on how much money you have saved and whether gold was an investment option available when you started saving. Consider investing in both.
Gold offers potential returns and is therefore a safe investment. Retirees will find it an attractive investment.
Gold is more volatile than most other investments. This causes its value to fluctuate over time.
But this doesn't mean you shouldn't invest in gold. This just means you need to account for fluctuations in your overall portfolio.
Another benefit of gold is that it's a tangible asset. Gold is much easier to store than bonds and stocks. It can also be transported.
Your gold will always be accessible as long you keep it in a safe place. Additionally, physical gold does not require storage fees.
Investing in gold can help protect against inflation. It's a great way to hedge against rising prices, as gold prices tend to increase along with other commodities.
A portion of your savings can be invested in something that doesn't go down in value. Gold tends to rise when the stock markets fall.
Another advantage to investing in gold is the ability to sell it whenever you wish. You can also liquidate your gold position at any time you need cash, just like stocks. You don’t even need to wait until retirement to liquidate your position.
If you do decide to invest in gold, make sure to diversify your holdings. Don't place all your eggs in the same basket.
Do not buy too much at one time. Start small, buying only a few ounces. Add more as you're able.
Keep in mind that the goal is not to quickly become wealthy. Rather, it's to build up enough wealth so you won't need to rely on Social Security benefits.
And while gold might not be the best investment for everyone, it could be a great supplement to any retirement plan.
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor