Trump Media Files for Bitcoin ETF with Crypto.com as Custodian

Trump Media and Technology Group, the company majority-owned by former US President Donald Trump that operates his Truth Social media platform, has filed with the US Securities and Exchange Commission (SEC) to launch a Bitcoin exchange-traded fund (ETF). The filing, made on June 5, outlines the proposed structure and operations of the Truth Social Bitcoin (BTC) ETF. The assets of the Trust consist primarily of bitcoin held by a custodian on behalf of the Trust, with the goal of reflecting the performance of the price of Bitcoin.

The filing follows a proposal submitted by stock exchange NYSE Arca to the SEC to list the Truth Social Bitcoin ETF on behalf of crypto asset manager Yorkville America Digital, a partner of TMTG. If approved, the ETF will see cryptocurrency exchange Crypto.com act as its exclusive custodian, prime execution agent, and liquidity provider. The ETF is part of an increasing number of crypto products seeking regulatory approval in the US.

The new fund features exclusivity clauses, with Crypto.com offering certain services exclusively to the trust behind the product. The product fees are still to be determined. The filing also reserves the right for the ETF’s sponsor to front-run transactions, acknowledging potential conflicts of interest. The document states that prospective shareholders should be aware that the sponsor may take positions in bitcoin that are opposite or ahead of the positions taken for the Trust, and there can be no assurance that this will not have an adverse effect on the performance of the Trust.

In the case of a fork, ETF holders will have no right to the corresponding asset. As explained in the filing, the Sponsor will cause the Trust to permanently and irrevocably abandon the Incidental Rights. While many Bitcoin ETF filings acknowledge potential conflicts of interest, they typically include measures to mitigate such conflicts. This filing, however, does not specify any such measures, raising questions about the potential impact on the ETF's performance and the interests of its holders.