New ETF Proposal Seeks to Invest 25% of Its Fund in Bitcoin Futures

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A recently submitted exchange-traded fund proposal is planning on investing 25% of its portfolio on Bitcoin futures.

On Monday, the Securities and Exchange Commission published an application filed by Realty Shares ETF Trust, a subsidiary of U.S.-based asset management firm Blockforce capital, seeking to add “Reality Shares Blockforce Global Currency Strategy ETF” to NYSE Arca’s publicly listed firms. As indicated in the filing, the Fund is intended to be apportioned to money market mutual funds, sovereign debt instruments, as well as cash-settled Bitcoin futures contracts.

According to the registration form:

“The Fund expects to obtain exposure to Bitcoin Futures by investing up to 25% of its total assets, as measured at the end of every quarter of the Fund’s taxable year, in a wholly-owned and controlled Cayman Islands subsidiary. However, the Adviser will seek to limit the Subsidiary’s investment in Bitcoin Futures, so the Fund’s aggregate notional exposure to Bitcoin Futures is limited to 15% of the Fund’s net assets at the time of investment.”

As further detailed, the Fund also plans to apportion 15% of its total net assets to Fixed Income Securities and 10% to Money Market Instruments for margin and cash management purposes.

The ETF will initially include Cboe’s and CME’s Bitcoin futures, with plans to eventually support more Bitcoin futures.

As it stands, Reality Shares’ Bitcoin ETF filing is currently under review by the Securities and Exchange Commission (SEC) to determine whether the proposal would be approved or amended, in which case Reality Shares would need to file it again. Should the securities regulator deem the registration unfit for approval, Realty Shares could either desert the plan altogether or resubmit the Bitcoin ETF application after amending the proposal based on the SEC’s recommendation.

The filing follows a slew of other previous Bitcoin ETF proposals submitted by a number of other startups, most notable of which includes VanEck/SolidX and Bitwise Asset Management. While VanEck/SolidX has inadvertently withdrawn their application last month following a prolonged US government shutdown, Bitwise’s proposal is still pending for review.

Prior to withdrawing VanEck/SolidX’s application, the startup previously published a proposed rule amendment for Bitcoin ETF back in July 2018. A month later, the securities watchdog has begun its evaluation to decide whether or not to approve the startup’s proposed amendment, with the SEC’s final decision set to be announced on February 27. However, Vaneck’s proposal, which was resubmitted on January 31, has since been abandoned.

While the SEC has so far mostly rejected other Bitcoin ETF applications in previous months, SEC commissioner Robert J. Jackson stated last week that the approval of a Bitcoin-based ETF is inevitable.