Even though closed-end funds are not subject to the same liquidity risks from the bitcoin futures market as mutual funds or ETFs, the Statement nevertheless recommends that sponsors of closed-end funds consult the staff prior to filing for a closed-end fund that would invest in bitcoin futures.
In January 2018, Dalia Blass, the then-director of IM, issued a letter potential for manipulation and other risks.
Whether, in light of the experience of mutual funds investing in the bitcoin futures market, the bitcoin futures market could accommodate ETFs.
Mutual Funds.
1940 Act ETFs.
Closed-End Funds.
Exchange-Traded Products Not Registered under the 1940 Act.
For example, the SEC previously has identified the bitcoin futures market as not being a “market of sufficient size” to deter potential manipulation in the underlying bitcoin markets for purposes of the SEC’s authority to approve or disapprove exchange listing rules under Section 6 of the Securities Exchange Act of 1934, as amended15 — and while the Statement acknowledges the growth of the bitcoin futures market in recent years, the Statement expressly disclaims any position on whether the bitcoin futures market is now a market of “sufficient size” for such purposes.16 It seems likely that the IM staff’s determination of whether the bitcoin futures market is sufficiently liquid and deep to accommodate 1940 Act ETFs will be made in coordination with the determination as to whether the market is of sufficient size to allow for the offering of non-1940 Act bitcoin ETPs.
Mr. Conner has represented financial services companies, including mutual funds, exchange traded funds , insurance companies issuing fixed and variable annuities, commodity pools and commodity pool operators and other types of financial services firms for over 25 years.
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