- Teucrium’s application for an exchange traded fund was approved by the SEC recently.
- The Investment Company Act of 1940 was used instead of the Securities Act of 1933.
- The acceptance of this application has given a ray of hope to the community that there will be an exchange traded fund in the near future.
After months of rejections, the SEC may be about to approve the first spot of an exchange traded fund. The Teucrium Bitcoin Futures Fund was accepted by the Commission, which has weakened its arguments against spot Bitcoins.
No More Hiding For Spot ETFs
Last week, the SEC gave the green light to the Teucrium Bitcoin futures fund. It seems like a regular move by the Commission, but a closer look at the details shows that this particular application is odd.
Gary Gensler preferred the Investment Company Act of 1940, but the application was filed under the Securities Act of 1933. The Investment Company Act provides significant investor protections over the 1933 Act, Gensler said at a Financial Times conference. The first U.S. was preceded by applications that were quickly modified and brought under Gensler. It was approved for the exchange traded fund in October 2021.
The approval of Teucrium’s application filed under the 1933 application shatters the SEC’s argument about investor protection and lays the groundwork for a bright future according to an analyst.
“Gensler initially approved Bitcoin futures ETFs citing 1940 Act protections stating they’re better than 1933 products. But this a 1933 Act futures ETF,” said Seyffart. He went on to argue that this strengthened the possibility of a spot Bitcoin ETF.
“With the approval of the Teucrium ETF, the SEC just killed their own argument on that front,” said Geraci of ETF Store. He adds that the recent move will no doubt embolden and trigger a wave of applications for spot Bitcoin ETFs.
The Pessimists
Despite the fact that their arguments have been weakened, a cross-section of pundits believe that the latest approval doesn’t bring the system any closer to a spot exchange. The drawn-out process of Grayscale’s application and multiple rejections since the start of the year are cited as their reasons.
Ben Johnson said he didn’t think it did anything to address the SEC’s concerns. It’s possible that the SEC would be forced to file a lawsuit in order to force the issue.
If the SEC doesn’t approve Grayscale’s application by July 6th, the company might decide to file a lawsuit. According to a report, Grayscale CEO Michael Sonnenshein said that all options were on the table.
Geraci believes that the SEC will not approve physically backed exchange traded funds until they have oversight of the cryptocurrencies.
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