A Spot Bitcoin ETF With ESG Twist May Be Coming

Upstart 7RCC Global promises to dedicate 20% of the fund’s portfolio to carbon credits.

Wealth Management Editor
Reviewed by: etf.com Staff
Edited by: Mark Nacinovich

Give ETF upstart 7RCC Global Inc. credit for creativity with a regulatory filing for a spot bitcoin ETF that simultaneously tosses a bone to the environmental set by promising to dedicate 20% of the fund’s portfolio to carbon credits. 

In the horse race for a spot bitcoin exchange-traded fund, with more than a dozen filings under review by the Securities and Exchange Commission heading toward a potential early January finish line, Miami-based 7RCC would be considered a long shot.  

But who knows? And that’s what makes the ESG twist so interesting as big dogs like BlackRock Inc., Fidelity Investments and ARK Invest appear to be likely favorites to gain early momentum. 

As Bloomberg Intelligence ETF analyst Eric Balchunas likes to say, success in the ETF business requires either cheap beta or an unique “hot sauce.” 

By bolting an ESG, or environmental, social and governance, allocation onto a spot bitcoin strategy, the 7RCC Bitcoin and Carbon Credit Futures ETF appears to be taking the hot sauce route.  

Spot Bitcoin and ESG 

In a blog post this week, Gemini announced it will act as the custodian of the ETF, which would trade under the ticker BTCK if approved.  

“The Fund offers a unique opportunity for investors to diversify their portfolios, balancing the innovative nature of Bitcoin with the progressive realm of Carbon Credit Futures,” the blog post reads.  

“In doing so, the Fund provides investors with an integrated single-trade approach to digital assets and environmental sustainability,” it continues. 

As detailed in a Bloomberg Intelligence article, bitcoin has drawn criticism from environmentalists for the energy consumption required in the digital mining process. With that in mind, perhaps it makes sense to try to offset the impact with some carbon credits. 

One potential problem with that strategy is the fading appeal of ESG investing strategies that have become politically polarizing.  

The best example of the market’s ESG appetite is the $13.2 billion iShares ESG Aware MSCI USA ETF (ESGU), which has suffered $9.3 billion worth of outflows this year despite a 24% gain. 

“I think ESG is going through an identity crisis, and they will probably come out with some new names to get away from the ESG label,” said Balchunas.  

Time will tell if the new wrinkle passes muster at the SEC. And if the bitcoin/carbon credits strategy does hit the street, it will be up to investors to decide if they want to hitch to a ride of two horses potentially traveling in opposite directions. 

Contact Jeff Benjamin at [email protected] and find him on X at @BenjiWriter     

Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.