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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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