Crypto-related ETF Withdrawn by Reality Shares Trust, Following SEC's Request

  • Reality Shares Trust told to withdraw its crypto-related ETF proposal by the SEC.
  • Proposal has been withdrawn, as VanEck-SolidX re-submit bitcoin ETF application.

The US Securities and Exchange Commission (SEC) recently requested the withdrawal of a cryptocurrency-related exchange-traded-fund (ETF) application - which was submitted by Reality Shares ETF Trust.

In an official letter published by the American securities regulator (on February 12th), the SEC clarified that the withdrawal was “at the request of the Staff of the US Securities and Exchange Commission. No securities have been sold in connection with the offering of the Fund.”

Launched by Blockforce Capital, the Reality Shares ETF Trust had initially submitted an application for an ETF (on February 11th) that proposed a portfolio comprising of bitcoin (BTC) futures contracts and more traditional sovereign debt instruments. Following the SEC’s request, Reality Shares has withdrawn its ETF filing.

Reality Shares' ETF Involved Bitcoin Futures

As mentioned in Reality Shares’ application, the proposed ETF was developed to “provide investment exposure to global currencies, both fiat and virtual currencies [cryptocurrencies], that have been widely adopted for use [as a store-of-value (SoV), international remittance, foreign-exchange (FX) trading] throughout the world.”

In its ETF application, Reality Shares Trust had proposed a bitcoin futures contract based on investments made by a wholly owned Cayman Islands-headquartered subsidiary. As noted in the proposal, the cash-settled BTC futures began trading (in December 2017) on the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (Cboe)

Earlier this month, another crypto-related ETF was jointly proposed by Sabretooth Advisors, an investment consultancy and AdvisorShares, a US-based investment management company. The ETF proposed by the companies has been designed to track stocks of traditional tech firms, in addition to the performance of blockchain and cloud computing businesses. According to its designers, the new ETF was developed to allow investors to make strategic investments in emerging technologies.

Bitcoin ETF "Only A Question Of When"

On January 30th 2019, Gabor Gurbacs, the digital asset strategy head at VanEck, announced that his firm along with the Cboe and SolidX had resubmitted (after withdrawing it earlier) an application to the SEC - which requested to allow the Cboe BZX Exchange to list shares of a bitcoin ETF.

Explaining why the initial bitcoin ETF application was withdrawn, Jan van Eck, the CEO of VanEck, said that the companies had been discussing the rule change with the SEC, however their talks ended due the US government shutdown. In order to avoid a potential rejection due to the government’s offices being closed, the proposal had been temporarily withdrawn.

Although a crypto ETF has not yet been approved, Ric Edelman, a 30-year Wall Street veteran, believes a bitcoin ETF will definitely be launched and that “it’s only a question of when.”