Reality Shares files ETF proposal that would invest 25% in BTC futures

12 Feb, 2019
by David Borman
News
Reality Shares files ETF proposal that would invest 25% in BTC futures

Reality Shares ETF Trust recently filed an ETF application with the Securities and Exchange Comission (SEC) for a product that would see 25% of the fund invested into Bitcoin futures. If approved it would be the first ETF to be even partially based upon cryptocurrency, which is arguably a step in the right direction.

The ETF is labelled "Reality Shares Blockforce Global Currency Strategy ETF" and was proposed on February 11th. In the application the company outlines the plans for exposure to Bitcoin through the use of both CBOE and CME Bitcoin futures products, though the application states other BTC futures may be explored down the line.

Read more: SEC Commissioner believes a BTC ETF will be approved eventually

From the application:

"As of the date of this Prospectus, the Fund plans to invest in the Bitcoin Futures traded on the CBOE Futures Exchange, LLC (“CFE”) and/or the Chicago Mercantile Exchange (“CME”) but may invest in Bitcoin Futures traded on other exchanges in the future."

It is also outlined how 25% shall be allocated into BTC futures using a Cayman Islands subsidiary:

"The Fund expects to obtain exposure to Bitcoin Futures by investing up to 25% of its total assets, as measured at the end of every quarter of the Fund’s taxable year, in a wholly-owned and controlled Cayman Islands subsidiary (the “Subsidiary”). The Subsidiary will be advised and managed on a day-to-day basis by the Adviser and will have the same investment objective as the Fund."

To be clear, this application has only just been submitted and we have no idea as to whether it will be approved or not. If approved, it would become the first ETF to be based upon Bitcoin, but even so it is only a fraction of the fund and based upon futures, not Bitcoin directly. It may be a step in the right direction for institutional adoption, but it is still a small one.

Watch: The Pros and Cons of a Bitcoin ETF

Read more: CBOE refiles the VanEck/SolidX Bitcoin ETF proposal to SEC

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Read more about:Bitcoin (BTC)SECETF

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