SEC Begins Review of Trump Media’s Bitcoin-Heavy ETF Proposal Amid Broader Crypto ETF Developments

The US Securities and Exchange Commission (SEC) has officially accepted the application for a combined Bitcoin and Ethereum exchange-traded fund (ETF) filed by Trump Media, marking a significant step in crypto investment products.

• This proposed ETF aims to provide investors with direct exposure to Bitcoin (BTC) and Ether (ETH), allocating 75% to Bitcoin and 25% to Ether, with custody managed by Crypto.com and sponsorship by Yorkville America Digital.
• According to COINOTAG, industry analyst James Seyffart highlights that the SECs recent actions, including delays and amendment requests, signal cautious but progressive regulatory engagement with crypto ETFs.

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SEC Acceptance Initiates Review of Bitcoin and Ethereum ETF Application

The US Securities and Exchange Commission‘s acknowledgment of Trump Media’s Bitcoin and Ethereum ETF application officially starts the regulatory review period, a critical milestone for crypto investment products. The ETF proposes a dual-asset structure, with 75% allocated to Bitcoin and 25% to Ether, offering investors diversified exposure to the two largest cryptocurrencies by market capitalization. The fund plans to list shares on the NYSE Arca exchange, which is known for hosting various innovative ETFs.

Custody of the underlying crypto assets will be handled by Foris DAX Trust Company, operating as Crypto.com, ensuring secure storage with private keys held in cold storage. Yorkville America Digital will serve as the fund‘s sponsor, responsible for managing the fund’s operations and regulatory compliance. This collaboration between established crypto custodians and asset managers underscores the growing institutional interest in regulated crypto investment vehicles.

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ETF Valuation and Custody Mechanisms Enhance Investor Confidence

The ETF‘s net asset value (NAV) will be calculated daily, with Bitcoin’s valuation based on the CME CF Bitcoin Reference Rate, which aggregates trade data from multiple major exchanges to provide a reliable price benchmark. Similarly, Ether‘s valuation will use the CME CF Ether Reference Rate, unless the sponsor exercises discretion to adjust the methodology. This transparent pricing mechanism aims to reduce volatility and provide investors with a clear understanding of the fund’s value.

Importantly, the custodian will segregate the ETFs Bitcoin and Ether holdings from other customer assets, mitigating risks related to asset commingling. The use of cold storage for private keys further enhances security, addressing one of the primary concerns for institutional investors considering crypto exposure.

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Fidelitys Solana ETF Faces Further Delays Amid SEC Review

In parallel developments, the SEC has postponed its decision on Fidelitys proposed spot Solana (SOL) ETF, extending the public comment period and requesting additional feedback. This delay reflects the regulators cautious approach to approving spot crypto ETFs, particularly those involving altcoins beyond Bitcoin and Ether.

The Cboe BZX Exchange initially filed for the Solana ETF listing in late March, but the SECs request for amendments and extended review timelines indicates ongoing scrutiny. Bloomberg ETF analyst James Seyffart noted that such delays are expected and part of the broader regulatory process, emphasizing that no approvals have yet been granted.

Regulatory Signals Point to Gradual Progress on Crypto ETFs

Seyffart‘s insights suggest that the SEC’s recent interactions with issuers, including amendment requests and extended review windows, should be interpreted as positive signs of regulatory engagement rather than outright rejection. The SEC appears to be working towards establishing a more streamlined framework for digital asset exchange-traded products (ETPs), which could facilitate future approvals.

While the process involves iterative back-and-forth between issuers and regulators, these developments indicate a maturing regulatory environment that balances investor protection with innovation. Market participants are advised to monitor these regulatory updates closely as they could shape the landscape for crypto investment products in the near term.