The Securities and Exchange Commission greenlighted Teucrium’s bid to start a futures-based bitcoin ETF, potentially signaling more openness to an eventual spot bitcoin fund launch.
The order issued on Wednesday allows Teucrium to launch its bitcoin futures ETF under the Securities Act of 1933 instead of under the Investment Company Act of 1940 that the ProShares Bitcoin Strategy ETF (BITO), the VanEck Bitcoin Strategy ETF (XBTF) and the Valkyrie Bitcoin Strategy ETF (BTF) use.
Teucrium’s fund will trade under the ticker “BCFU” on the NYSE Arca with a 1% management fee, according to its prospectus.
The vast majority of ETFs in the U.S. are issued under the so-called ’40 Act structure thanks to the 2019 ETF Rule allowing funds to automatically become effective after 75 days unless regulators intervene, and have broader investor protection and diversification remits than the ’33 Act structure.
In a Twitter thread Thursday, Grayscale CEO Michael Sonnenshein argued that approving Teucrium’s fund in the ’33 Act structure means the SEC must approve his firm’s application to convert the $28.1 billion Grayscale Bitcoin Trust into an ETF.
Therefore, if the SEC is comfortable with a #Bitcoin futures #ETF, they must also be comfortable with a spot Bitcoin ETF. And they can no longer justifiably cite the ‘40 Act as being the differentiating factor.
— Sonnenshein (@Sonnenshein) April 7, 2022
The SEC is currently accepting public comment on Grayscale’s conversion attempt and is scheduled to make a final decision by July 6. Grayscale’s attorneys wrote to the SEC last November to argue that if it refused to allow the conversion, the firm would view it as an arbitrary decision under the Administrative Procedure Act. Such language suggests Grayscale would sue the SEC in the event of a denial.
So far, the agency has denied every spot bitcoin ETF application made to it over the course of nearly a decade for reasons ranging from its lack of oversight of the bitcoin exchanges and a lack of surveillance-sharing agreements to track price manipulation attempts.