New Crypto Fund Could Promote Release of Physically Backed US BTC ETF: Bloomberg

Aaron Limbu   Sep 15, 2022 16:00

The launch of a new futures-backed product could potentially back the release of handouts for a physically-backed US Bitcoin exchange-traded fund, according to a Bloomberg report.


The Hashdex Bitcoin Futures ETF (ticker DEFI) was filed under the Securities Act of 1933, rather than the Investment Company Act of 1940 - which is unlike existing derivatives-backed crypto ETFs.

DEFI, developed with Teucrium, started trading on Thursday.

Crypto industry watchers have taken a keen interest in the filing procedure as the 1940 law has been the preferred format for Securities and Exchange Commission Chair Gary Gensler, according to whom it has greater investor protections.

The SEC has, however, repeatedly denied a physically-backed Bitcoin ETF, but if it were to be released, then it would fall under the 1933 act and DEFI's launch could potentially be a stepping stone to approval, according to the Bloomberg report.

"The launch of this Teucrium product only bolsters the case for a spot Bitcoin ETF since it’s utilizing the exact same fund structure," said Nate Geraci, president of The ETF Store, an advisory firm. 

"That said, a ‘bolstered case’ doesn’t mean the SEC will budge from their hard-line stance. I’m still in the camp that a spot product simply won’t be approved until the SEC has regulatory oversight of crypto exchanges," he added.

The recent high-stake rejection of the physical Bitcoin ETF was in June when the SEC denied a bid from Grayscale Investments to transform its Bitcoin trust into an ETF.

In response, the digital-asset manager filed an appeal with the United States Court of Appeals for the District of Columbia Circuit to argue that the regulator violated the Administrative Procedure Act (APA) and Securities Exchange Act of 1934, Blockchain.News reported.

The SEC’s rejection is predicated on the fact that there is no trusted system with which to prevent fraud, the same position it has hinged its past rejection decisions on.

DEFI launches at a volatile time in the crypto universe. Bitcoin has plunged over 57% in 2022, weighed down by sky-high inflation and an aggressive Federal Reserve, Bloomberg reported.

Image source: Shutterstock

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