Reality Shares Fiat and Bitcoin Futures ETF Filing Withdrawn After One Day at SEC’s Request

Exchange-traded fund provider Reality Shares has withdrawn its application to have its proposed “Reality Shares Blockforce Global Currency Strategy ETF” approved by the SEC- one day after the request was initially filed, reports.

According to the “request for withdrawal,” the demand was made at the behest of the SEC.

A February 12th letter to the SEC from Reality Shares Treasurer Tom Trivella states:

“Ladies and Gentlemen:

Pursuant to Rule 477(a) under the Securities Act of 1933 (the “1933 Act”), Reality Shares ETF Trust (the “Registrant” or the “Trust”) hereby respectfully requests the withdrawal of Post-Effective Amendment No. 25 to the Trust’s Registration Statement on Form N-1A, as it applies to the registration of the Reality Shares Blockforce Global Currency Strategy ETF (the “Fund”) (“PEA No. 25”). PEA No. 25 was filed with the U.S. Securities and Exchange Commission (the “Commission”) via EDGAR (Accession No. 0001144204-19-005966) on February 11, 2019, pursuant to paragraph (a)(2) of Rule 485 under the 1933 Act. The Registrant is requesting the withdrawal of PEA No. 25 at the request of the Staff of the U.S. Securities and Exchange Commission. No securities have been sold in connection with the offering of the Fund.”

According to the initial request to offer the proposed ETF, the fund in question was to be made up of a “basket” of both fiat currencies (“sovereign debt instruments”), bitcoin futures shares and money-market mutual funds.

The prospectus reads:

“The Fund is an actively managed exchange-traded fund (“ETF”) that is designed to provide investment exposure to global currencies, both fiat and virtual currencies, that have been widely adopted for use (e.g., as store-of-value, international remittance, foreign-exchange trading) throughout the world (“Significant Global Currencies”). The Fund seeks to achieve its investment objective by investing in a portfolio comprised of:

· high-quality, short-term (no greater than 18-month maturity), sovereign debt instruments (“Fixed Income Securities”) listed for trading on U.S. exchanges and denominated in U.S. Dollar (USD), Euro (EUR), British Pound Sterling (GBP), Japanese Yen (JPY) and Swiss Franc (CHF) (together “Fiat Significant Global Currencies”),
· bitcoin futures contracts of various maturities listed for trading on U.S. exchanges that provide exposure to the price movements of bitcoin (“Bitcoin Futures”), and
· money market mutual funds and/or other cash equivalents (“Money Market Instruments”).

According to the report, “the fund expects to obtain exposure to Bitcoin futures by investing up to 25 percent of its total assets in a wholly owned and controlled Cayman Islands subsidiary.”

As well, the filing reportedly, “…explains that the investment adviser to the fund ‘will seek to limit the subsidiary’s investment in bitcoin futures so the fund’s aggregate notional exposure to bitcoin futures is limited to 15% of the fund’s net assets at the time of investment.'”

No information is currently available explaining why the SEC requested the withdrawal so swiftly.

Reality Shares could not be reached by press time for comment, though any comments will be appended if provided.

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