Reality Shares ETF Trusts, a division of Blockforce Capital, is withdrawing an exchange-traded fund proposal that, if approved, would have included exposure to bitcoin futures.
The move comes just days after the proposal for the Reality Shares Blockforce Global Currency Strategy ETF was first submitted to the Securities and Exchange Commission (SEC). According to a note submitted to the SEC on Tuesday, the company withdrew its ETF proposal at the request of agency staffers.
A lawyer for Reality Shares confirmed the move when reached for comment by CoinDesk, stating:
“I can confirm that we did withdraw it and it was withdrawn because the staff are still taking the position that it’s not appropriate to file a registered 40 Act fund with cryptocurrency exposure at this time.”
The lawyer added that the Investment Company Act of 1940 – which the proposal was filed under – would have resulted in the proposal becoming automatically approved within 75 days, which is a specific aspect with which SEC staffers took issue.
Blockforce Capital could not be reached for comment.
The ETF proposal would have invested in a portfolio of sovereign debt instruments, alongside bitcoin futures products from the CME and Cboe exchanges. Reality Shares also left the door open to investing in other bitcoin futures products after the ETF began trading.
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Japan’s Financial Services Agency (FSA) is apparently open to approving crypto exchange-traded funds (ETFs).
A Bloomberg report on Monday, citing a person “familiar with the matter,” said that the FSA is currently ascertaining institutional interest in ETFs that track cryptocurrencies and could ultimately give them the go ahead.
Japan’s ruling Liberal Democratic Party will reportedly submit draft legislation by March 2019, that could include such a move through amendments to existing financial rules. The bill, which would also bring in more self-regulatory oversight of the industry and class many ICO tokens as securities, could come into law by 2020, the report indicated.
However, Bloomberg added that the FSA has now dropped plans to include approval for trading crypto derivatives on financial exchanges due to concerns the products would mainly lead to speculation.
The increased scrutiny of the crypto space in Japan follows a major hack of the Coincheck exchange in January that saw around $533 million in cryptocurrencies stolen.
Crypto ETFs are seen by many market observers as a means to bring institutional capital into the sector, though not all are keen on the idea.
In the U.S., several participants are planning to launch such products, although the Securities and Exchange Commission (SEC) has not yet approved any. Back in August, the the agency rejected nine bitcoin ETF applications “to prevent fraudulent and manipulative acts and practices,” and in December postponed a decision on a product from VanEck/SolidX until February.
Further, SEC chairman Jay Clayton said at CoinDesk Consensus in November that he doesn’t see a pathway to a cryptocurrency ETF approval until concerns over market manipulation are addressed.
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