The US Securities and Exchange Commission (SEC) has taken a significant step by approving Trump Media’s proposal to launch a Bitcoin (BTC) and Ethereum (ETH) Exchange Traded Fund (ETF) on NYSE Arca. This move officially initiates the review period for regulatory approval or denial.
The planned ETF aims to offer investors direct exposure to a digital asset portfolio consisting of 75% Bitcoin and 25% Ethereum. Custodial responsibilities for the digital assets will fall to Foris DAX Trust, a subsidiary of Crypto.com, while Yorkville America Digital will act as the fund’s sponsor.
The fund’s net asset value (NAV) will be calculated on a daily basis, utilising the reputable CME CF Bitcoin Reference Rate for its Bitcoin segment. This reference rate aggregates trading data from various leading cryptocurrency exchanges to ensure accurate pricing. For Ethereum, the valuation will be aligned with a similar CME CF reference rate, although the fund’s sponsor may opt for a different benchmark if they choose.
Currently, the competition for SEC approval of crypto-backed ETFs is intensifying, placing considerable pressure on the regulatory body. In recent actions, the SEC has encouraged issuers of Solana ETFs to revise and refile their proposals in response to this competitive environment. However, a lack of a clearly defined regulatory framework for these products could result in delays and uncertainty, as evidenced by the SEC’s recent decision to reverse its approval of Grayscale’s multi-crypto ETF.
As the landscape for cryptocurrency ETFs evolves, both market participants and regulatory bodies are navigating uncharted waters, indicating a period of dynamic change in the investment realm. The continuation of the review process for the Trump Media ETF could serve as an important marker for the future of cryptocurrency investments in the regulated market.
