SEC Extends Review Period for 7RCC Bitcoin and Carbon Credit ETF

The U.S. Securities and Exchange Commission has announced a delay in its decision regarding the approval of a Bitcoin spot ETF proposed by 7RCC, a crypto asset management firm. 

Originally scheduled for a verdict by May 10, 2024, the SEC has extended the deadline to June 24, 2024, to allow additional time for review. The announcement came through a notice issued by the SEC on May 2nd, indicating a 45-day extension to evaluate the proposed rule change.

The 7RCC ETF is designed to provide investors with direct exposure to Bitcoin and carbon credits. The fund plans to allocate 80% of its assets to Bitcoin, with the remaining 20% invested in financial instruments linked to carbon credit futures. This innovative approach aims to combine cryptocurrency investment with environmental considerations, tracking the Vinter Bitcoin Carbon Credits Index.

Details of the Proposed ETF

7RCC’s proposed ETF is unique in its structure, aiming to bridge the gap between digital asset investment and environmental sustainability. By incorporating carbon credits into its portfolio, the ETF targets investors interested in environmentally responsible investment options alongside cryptocurrency exposure. The carbon credits included in the ETF are sourced from major emissions trading systems such as the European Union Emissions Trading System, the California Carbon Allowance, and the Regional Greenhouse Gas Initiative.

As stated in the filing with the SEC, the ETF’s dual focus on Bitcoin and carbon credits is an effort to appeal to a broader market base, including institutional investors who may have sustainability mandates. Crypto exchange Gemini has been designated as the custodian for the Bitcoin assets in the ETF, ensuring security and regulatory compliance.

Market Context and Institutional Perspectives

The delay in the SEC’s decision comes amid a broader context of increasing interest in cryptocurrency-related investment products. January saw the launch of 11 Bitcoin spot ETFs, indicating a growing acceptance and institutional interest in cryptocurrencies as an asset class. However, the regulatory landscape remains cautious, with the SEC taking additional time to assess the implications of integrating such innovative financial products into the mainstream market.

In related news, discussions regarding the approval of an Ether spot ETF have been less optimistic. Michael Saylor, Executive Chairman and Co-founder of MicroStrategy, recently expressed concerns at a conference, suggesting that the SEC might classify Ether and other cryptocurrencies like BNB, SOL, XRP, and ADA as securities, which could impact their eligibility for similar investment products.

Investors looking towards the 7RCC Bitcoin spot ETF as a potential opportunity will need to wait until late June for the SEC’s final decision. This delay allows the SEC to conduct a thorough review, ensuring that the proposed ETF meets all regulatory requirements and investor protection standards.