-
@ Sikto
2024-01-16 02:05:45
https://thoughtful.purposeinvest.com/how-does-a-bitcoin-etf-work/amp/
“Demystifying clearing and settlement
We mentioned clearing and settlement a couple of times above. And while most people have a vague idea of what that means, breaking it down further is a worthwhile exercise if you really want to understand how a spot Bitcoin ETF works.
So, let’s peel back the layers a bit more.
First off, let’s make sure we understand what clearing and settlement means. Clearing is the process of reconciling daily transactions.
Settlement is the finalization of these transactions. In the context of a spot Bitcoin ETF, settlement occurs when bitcoin is titled to the buyer and money is transferred to the seller.
Clearing and settlement for Bitcoin/cash looks something like this:
The ETF Provider will agree upon terms to buy/sell crypto in bulk quantities with Crypto Trading Counterparties.
The Sub-Custodian will be informed about the trades and will proceed to settle and clear these trades. This involves receiving the cash and crypto from each party, verifying that each party provided the appropriate amounts and then releasing the cash/crypto to the other party.
This settlement and clearing process can take between minutes and one business day to occur.
When the settlement process is complete, the transactions are final and irreversible.
The role of a trusted intermediary (Sub-Custodian in this case) in the clearing and settlements process ensures that no one pays for something and does not receive what they’ve bought.”