SEC Considering Approval of Carbon Neutral Bitcoin ETF

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United States: SEC considers approval of carbon neutral Bitcoin ETF

December 31, 2021

Cadwalader, Wickersham & Taft LLP

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On September 20, 2021, NYSE Arca, Inc. (the “Exchange”) filed a rule change proposal to list a Bitcoin trust that would be “carbon neutral”. The SEC has extended its deadline for considering the application. The SEC is seeking comments on a list of questions in addition to comments relating to the adequacy 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 US dollars on a carbon neutral basis. The ETF intends to offset the carbon footprint associated with Bitcoin on a quarterly basis by paying for the instant withdrawal of voluntary carbon credits equal to the daily estimated carbon emissions associated with Bitcoins held by the ETF.

Remark

Last week, the SEC rejected the listing application of two ETFS tracking Bitcoin’s performance, arguing that the ETFs did not meet various listing requirements under Section 6 of the Exchange Act, which are aimed at to guarantee fair pricing. Given the SEC’s objections to these ETFs, it is not clear on what basis the SEC could prepare for a carbon neutral ETF.

Primary sources SEC press release n ° 34-93840

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