US Regulator Delays Decision on Eco-Friendly Bitcoin ETF

September 05, 2024 06:51 PM AEST | By Team Kalkine Media

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US Regulator Delays Decision on Eco-Friendly Bitcoin ETF — Image source: Shutterstock

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The U.S. Securities and Exchange Commission (SEC) has again postponed its decision regarding the listing of a unique exchange-traded fund (ETF) proposed by NYSE Arca. The ETF, known as the 7RCC Spot Bitcoin and Carbon Credit Futures ETF, combines spot Bitcoin and carbon-credit futures. This delay, announced on September 4, extends the deadline for a final decision to November 21.

This ETF, issued by Tidal Investments, was first registered in December 2023. NYSE Arca subsequently filed an initial 19b-4 request for the ETF in March. The fund aims to offer exposure to Bitcoin while addressing environmental concerns by offsetting carbon emissions. The ETF seeks to track a portfolio composed of 80% Bitcoin and 20% carbon-credit futures.

The rationale behind this (ETF) is to mitigate the environmental impact of Bitcoin mining, which is known for its significant electricity consumption. According to an August report by the International Monetary Fund, cryptocurrency mining and data centers collectively account for approximately 1% of global greenhouse gas emissions. This issue might be partially alleviated by recent developments, including the Bitcoin halving event in April, which could potentially reduce methane emissions related to mining activities.

The carbon-credit futures component of the ETF will track emissions allowances from various cap-and-trade systems, including those in the European Union and California. These futures are designed to follow the value of allowances under cap-and-trade regulations, which aim to reduce greenhouse gases over time.

In a related development, the SEC also delayed a decision on the Nasdaq listing request for the Hashdex Nasdaq Crypto Index ETF. This fund, proposed in June, seeks to create a comprehensive crypto portfolio on Nasdaq’s electronic securities exchange.

The repeated delays by the SEC reflect ongoing scrutiny and regulatory considerations surrounding new financial products in the cryptocurrency space.

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