On September 20, 2021, NYSE Arca, Inc. (the "Exchange") filed a proposed rule change to list a Bitcoin trust that would be "carbon neutral." The SEC extended its time to consider the application. The SEC is seeking comments on a list of questions in addition to comments addressing the sufficiency of the Exchange's statements in support of its proposal.
The stated investment objective of the exchange-traded fund ("ETF") is to track the performance of Bitcoin as measured by an index designed to reflect the performance of Bitcoin in U.S. dollars on a carbon-neutral basis. The ETF intends to offset the carbon footprint associated with Bitcoin once a quarter by paying for the instantaneous retirement of voluntary carbon credits equal to the daily estimated carbon emissions associated with the Bitcoins held by the ETF.
Commentary
Last week, the SEC rejected the listing application of two ETFS tracking the performance of Bitcoin based on the view that the ETFs did not satisfy various listing requirements under Section 6 of the Exchange Act that are intended to ensure fair pricing. Given the SEC's objections to those ETFs, it is not clear on what basis the SEC might warm up to a carbon-neutral ETF.
Primary Sources
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