A new crypto exchange-traded fund (ETF) proposal has been filed with the Securities Exchange Commission (SEC), according to a posting by the SEC on May 9th.
Commodity pool operator United States Commodity Funds LLC (USCF) has created the ETF and will back it alongside Crescent Crypto, a New Jersey-based hedge-fund. USCF comes under the regulatory oversight of the Commodity Futures Trading Commission and the National Futures Association under the Commodity Exchange Act (“CEA”), according to the filing.
The USCF Crescent Crypto Index Fund – “XBET”– will track the performance of a market capitalization weighted portfolio of Bitcoin (BTC) and Ether (ETH), offering investors cryptocurrency exposure through a public vehicle.
According to the filing, the ETF will trade “like other publicly traded securities,” brought and sold daily by investors placing “orders through their brokers and may incur customary brokerage commissions and charges.”
XBET will reflect the daily changes in percentage terms of the Crescent Crypto Core II Index (CCINDX), less XBET’s expenses. The new “CCINDX” will comprise of the two cryptocurrencies – BTC and ETH – recognized as a decentralized ledger, which is not controlled by any central authority and price of which is determined by the demand and supply of the asset that is limited in number. The percentage distribution of each cryptocurrency will be re-balanced on a monthly basis.
Although it could be a while until it gets accepted, the co-sponsors expect the ETF’s shares to break even within a year, pitching the initial offering price at $20.00. If approved, the ETF will be issued as shares on the New York Stock Exchange (NYSE) Arca.
At the moment, two separately filed, pure BTC based ETF applications are still pending with the SEC. Decisions on two BTC ETFs – one filed by Bitwise Asset Management with NYSE Arca, and the other one from VanEck and SolidX, in partnership with Cboe BZX Exchange – were recently postponed to be reviewed this month.
However, XBET is not the first ETF proposal which involves Ether. Back in 2017, EtherIndex had filed with the SEC to trade its ETH-based – Ether Trust – product on the NYSE Arca.
Whilst SEC has yet to approve any crypto ETFs, it may be just a matter of time before one passes with the regulator. Earlier in February, SEC Commissioner Robert Jackson stated in an interview that an ETF proposal would eventually “satisfy the standards” the regulator had set.