- This is not an ordinary ETF proposal
- Reality Shares filed two other proposals in 2018
- SEC is yet to consider the rule change proposal
Reality Shares ETF has submitted an Exchange-Trade Fund proposal to the United States Securities and Exchange Commission (SEC). The newly proposed ETF plan contains instruments for sovereign debt and allocates a percentage of its portfolio to Bitcoin futures.
Reality Shares ETF Trust, which is a subsidiary of the United States-based Blockforce Capital, an asset management firm, filed its registration form with the Securities and Exchange Commission (SEC) on Monday, February 11, 2019. The registration has listed the “Reality Shares Blockforce Global Currency Strategy ETF” on the New York Stock Exchange (NYSE) Archs.
As per the application, the fund will invest in money market mutual funds, sovereign debt instruments, different cash instruments as well as Bitcoin futures contracts. The registration form reads partly:
“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 […] however, the Adviser will seek to limit the Subsidiary’s investment in Bitcoin Futures, so the Fund’s aggregate notional exposure to Bitcoin Futures is limited to 15% of the Fund’s net assets at the time of investment.”
Beyond the Scope of the Regular ETF
The current filing by Reality Shares shows the proposed ETF will go beyond the scope of the regular ETF proposals and will not be exclusively comprised of Bitcoin. Should the fund see the light of day, it will include extra features including high quality, short term debt instruments to trade on United States’ exchanges that are “dominated in the U.S. dollar, euro, British pounds sterling, Japanese yen and Swiss francs, […] Bitcoin futures, money market mutual funds and/or other cash equivalents.”
Reality Shares already offers two blockchain-based ETFs which it created last year in partnership with NASDAQ namely the Reality Shares Nasdaq Nexgen Economy ETF (BLCN), and the Reality Shares Nasdaq Blockchain China Index (BCNA).
The first one is a long-term growth investment vehicle that was incepted on January 17, 2018, and tracks investment returns for the Reality Shares Nasdaq Blockchain Economy Index.
The second ETF was launched on June 20, 2018, and tracks investment returns for Nasdaq Blockchain China Index incorporating blockchain-related companies located in Hong Kong and mainland China.
240 Days to Determine Fate
Both of last year’s Bitcoin ETFs are entirely different from the current filing since they do not include the sovereign debt instruments. SEC is yet to publish Reality’ Shares’ proposals to change the rules in its website which may indicate it is yet to examine the product. SEC has 240 days from the date of publishing to determine the fate of the rule change proposal.