BTC Futures ETF Withdrawn on SEC Staff Request
Blockforce Capital’s division, Reality Shares ETF Trusts is withdrawing its application for an ETF (exchange traded fund) from the US SEC (Securities and Exchange Commission). Had this proposal gone through, it would have also given the firm’s investors exposure to BTC (Bitcoin) futures.
Withdrawal Requested by Agency Staff
An application for the Reality Shares Blockforce Global Currency Strategy ETF had first been submitted just a few days ago.
In a note that the company had submitted to the SEC on Tuesday, Reality Shares stated that it had withdrawn its application at the behest of the agency’s staff. When reached for comment by the media, the company’s lawyer confirmed the reason.
The lawyer explained that the SEC staff had stated that it was not appropriate to file such a proposal (a registered 40 Act fund) that was exposed to cryptocurrencies at this point in time.
A registered 40 Act, is the Investment Company Act that was passed in 1940 and by filing under this Act, the proposal would have automatically been approved in 75 days. The approval timeline is what the SEC’s staff were objecting to.
According to sources, Dalia Blass, the SEC’s Director of Investment Management had issued a letter in January 2018, expressly forbidding fund sponsors from registering products related to cryptocurrencies under this Act.
The letter by Blass also stated that such fund sponsors would not be allowed to use Rule 485(a). Reality Shares’ application had used this Rule.
Reality Shares’ application, due to its 40 Act filing, falls under the purview of the Investment Management division of the SEC.
However, other Bitcoin ETF filings, such as those by CBOE/VanEck/SolidX and Bitwise, fall under the purview of the Division of Corporation Finance.
Reality Shares’ attorney explained the issue. 485(a) filings are reviewed and commented upon by the Investment Management division. However, unlike other non-investment companies that are on Form S-1 filings, the 485(a) filing does not action to be taken by the division. He said this was because there is no clause that specifies that a proposal cannot go effective until it is approved.
What this means is that the Reality Shares’ ETF would have gone live at the end of 75 days.
Had Reality Shares’ proposal gone through, the firm could have invested in a range of sovereign debt instruments as well as Bitcoin-based futures products listed on the CBOE and the CME exchanges.