Truth Social Files Bitcoin Ethereum ETF Application With SEC

The US Securities and Exchange Commission (SEC) has officially acknowledged the receipt of an application from Truth Social, the social media platform founded by former U.S. President Donald Trump, for a Bitcoin and Ethereum Exchange-Traded Fund (ETF). This development marks a significant step in the ongoing efforts to bring cryptocurrency-based financial products to mainstream investors. The application, filed with the SEC, seeks approval for an ETF that would track the performance of both Bitcoin and Ethereum, two of the most prominent cryptocurrencies in the market.

The ETF proposes offering investors exposure to Bitcoin (BTC) and Ether (ETH) through shares listed on NYSE Arca backed by the crypto assets, with 75% allocated to Bitcoin and 25% to Ether. Foris DAX Trust Company, doing business as Crypto.com, will act as the custodian, and asset management firm Yorkville America Digital will act as the fund’s sponsor. The filing comes amid a flood of other crypto ETF applications, and the SEC is reportedly exploring a simplified listing structure for crypto ETFs that would automate a significant portion of the approval process.

Truth Social's entry into the ETF market is noteworthy given its association with Trump. The platform has gained attention for its role in political discourse and its potential to influence public opinion on various issues, including cryptocurrency. The filing of an ETF application by Truth Social could signal a broader acceptance of cryptocurrencies within mainstream financial circles, as well as a potential shift in regulatory attitudes towards these digital assets.

The approval process for ETFs is rigorous and involves a thorough review of the proposed fund's structure, risk management strategies, and compliance with regulatory requirements. The SEC's decision on Truth Social's application will be closely watched by industry participants and investors alike, as it could set a precedent for future cryptocurrency ETF proposals. The outcome of this review will depend on various factors, including the strength of the application, the regulatory environment, and the overall market conditions.

Truth Social proposes that the net asset value of its ETF will be evaluated each day with the Bitcoin portion based on the CME CF Bitcoin reference rate, which is calculated by aggregating trade data from multiple major crypto exchanges. The Ether in the fund will use the Ether CME CF reference rate to evaluate its value “unless otherwise determined by the Sponsor at its sole discretion.” The crypto custodian will also keep custody of the fund’s Bitcoin and Ether in separate accounts from the rest of its customer base, according to the filing, and hold the private keys in cold storage.

Truth Social first filed an S-1 form with the SEC for the dual crypto ETF on June 16. The SEC's acknowledgment of Truth Social's ETF application represents a significant development in the cryptocurrency market. The move underscores the growing interest in cryptocurrency-based financial products and the potential for regulatory approvals in this space. As the SEC continues its review, industry participants and investors will be closely monitoring the progress of this application and its potential implications for the broader cryptocurrency market.