SEC Approves Bitcoin Futures ETF Filed Under the ’33 Act

Grayscale CEO Michael Sonnenshein said the decision weakens the agency’s argument to deny spot bitcoin ETFs

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key takeaways

  • All previously approved bitcoin futures ETFs had been filed under the Investment Company Act of 1940
  • Teucrium hopes the approval will “provide insight into the regulatory evolution of the cryptocurrency ecosystem”

The Securities and Exchange Commission has approved Teucrium’s bitcoin futures ETF, which Grayscale Investments’ CEO said weakens the agency’s argument to deny spot bitcoin ETFs.

Fund group Teucrium, perhaps best known for its agricultural ETFs, first filed for its Bitcoin Futures Fund last May. The ETF was filed under the Securities Act of 1933 (‘33 Act) — the regulation under which spot bitcoin ETFs are filed.

The SEC approved a proposed rule change to launch the product, according to an April 6 filing

Though the SEC had already permitted several ETFs that invest in bitcoin futures contracts — from issuers ProShares, Valkyrie and VanEck — those were filed under the Investment Company Act of 1940, commonly called the ‘40 Act.

SEC Chair Gary Gensler said last August that the agency would look favorably upon ETFs investing in bitcoin futures contracts on the Chicago Mercantile Exchange (CME) that were filed under the ’40 Act, citing the law’s “significant investor protections.”

A Teucrium spokesperson declined to comment on when the product could launch, but noted that the firm was pleased, though not surprised, by the SEC’s decision. 

“We know futures markets and are seasoned veterans of the nuanced regulatory world that is futures-based exchange-traded products,” the representative told Blockworks. “We are excited to once again be on the cutting edge of product innovation and are happy to have opened the door for bitcoin to enter the ’33 Act landscape.”

Grayscale CEO Michael Sonnenshein said in a Twitter post that as recently as last week the SEC cited differences between the ‘40 Act and ‘33 Act as the reason for denying a spot bitcoin ETF, referring to the agency’s latest decision on a proposed fund by Ark Invest and 21Shares.

Those arguments are now “significantly weakened,” he added.

“If the SEC is comfortable with a bitcoin futures ETF, they must also be comfortable with a spot bitcoin ETF,” Sonnenshein wrote Wednesday. “And they can no longer justifiably cite the ’40 Act as being the differentiating factor.”

Grayscale is seeking to convert its Bitcoin Trust (GBTC) to an ETF — a process registered under the ’33 Act. The decision is expected in July, and the firm has said it would consider legal action against the SEC if it continues to deny spot bitcoin ETFs.

Bloomberg Intelligence Analyst James Seyffart said in a tweet Wednesday that he believes the Teucrium approval strengthens the case for a spot bitcoin ETF and bolsters Grayscale’s potential lawsuit against the SEC if its GBTC conversion is denied.

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Seyffart had previously flagged the Teucrium application as potentially having consequences on bitcoin spot ETFs in registration. He wrote in a research note last month that he doesn’t expect the SEC to approve a spot bitcoin ETF until the middle of 2023.

Sumit Roy, crypto editor and analyst at ETF.com, told Blockworks earlier this week that he predicts a spot bitcoin ETF approval to remain “still a ways away” no matter how the agency ruled on the Teucrium proposal.

“We are pleased,” the Teucrium spokesperson said, “and trust that the result of this filing will provide insight into the regulatory evolution of the cryptocurrency ecosystem.”


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