The United States Securities and Exchange Commission (SEC) has rejected the spot Bitcoin Exchange Traded Fund (ETF) Application filed by One River Asset Management.
The decision by the regulator to reject the application for a rule change to list One River Carbon Neutral Bitcoin Trust on the New York Stock Exchange Arca came a few days earlier than the anticipated June 2nd.
According to the SEC, the application did not address the core concerns bordering on price manipulation noting that the company utilized “the same standard used in its orders considering previous proposals to list bitcoin-based commodity trusts.”
Additionally, the SEC said it was not convinced about One River Asset Management’s fraud prevention measures and the decision was made irrespective of crypto valuation.
“…disapproval of this proposed rule change does not rest on an evaluation of whether bitcoin or blockchain technology more generally, has utility or value as an innovation or an investment.”
The rejection of One River’s application is a strong testament to the fact that the SEC is not ready at this time to approve a spot Bitcoin ETF. While it is unclear the measures the SEC hopes to make before it can approve a full-fledge spot ETF, Hedge Funds and managers looking to break this record are largely unrelenting in their push.
After its Bitcoin ETF was rejected back in early April, Ark Investments and 21Shares have refiled their application in what is hoped will meet the SEC’s requirements. Grayscale Investments is also expecting replies from the SEC with respect to the conversion of its Grayscale Bitcoin Trust (GBTC) to a full-fledged crypto ETF.
Beyond his optimism, Grayscale’s CEO, Michael Sonnensheim has employed a series of targeted market advertisements and strategies to force the SEC’s hand in approving its products. Failure to do this might see the Michael-lead company take the SEC to court as threatened.
For One River, the rejection came despite the firm’s board playing host to Jay Clayton, the former SEC Chairman.
Asset management firm One River has filed for regulatory approval to offer a bitcoin ETF that would purchase carbon credits.
Asset management firm One River has filed for regulatory approval to offer a bitcoin exchange-traded fund (ETF) that would be carbon neutral through the purchase of carbon credits.
The One River Carbon Neutral Bitcoin Trust, as the product would be called, will factor in adjustments to reflect the current spot prices of carbon credits needed to offset the “estimated carbon footprint attributable to each bitcoin,” per a filing with the U.S. Securities And Exchange Commission.
Through a partnership with Moss Earth, based in Uruguay, the trust would purchase MCO2 tokens which represent certified reductions in greenhouse gas emissions.
“The MCO2 tokens issued by Moss are assets encrypted and tokenized utilizing blockchain technology and are stored on a registry managed by Verra,” according to the filing. “Each circulating MCO2 token is intended to represent a claim on a certified carbon credit held in an aggregated pool of carbon credits within the Moss account on the Verra Registry.”
Many firms in the U.S. have applied to offer a bitcoin ETF, as institutional interest in BTC ramps up, but none have yet been approved. And Bitcoin’s energy consumption has been a hot topic lately, with many firms indicating plans to mine BTC in environmentally-friendly ways.
Clayton has joined the advisory council of One River Digital Asset Management, which oversees Bitcoin investments.
The investment firm itself owns over $600 million of Bitcoin.
After ending his term as chairman of the SEC, Jay Clayton is returning to legal roles in various locations.
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Former SEC chair Jay Clayton has joined theadvisory council of One River Digital Asset Management, a digital asset investment firm.
Clayton Now Advisor at Crypto Company
Jay Clayton, who served as chair of the U.S. Securities and Exchange Commission between May 2017 to December 2020, has taken advisory roles at multiple firms.
Most recently, he has been appointed to the advisory council of One River Digital Asset Management, a prominent crypto investment firm.
Clayton said about One River CEO Eric Peters: “We were impressed by Eric’s willingness to hear our varying views on the digitization of our monetary, banking, and capital markets ecosystem and One River’s commitment to transparency.”
Clayton is regarded as one of the crypto industry’s top villains because the SEC declined to approve Bitcoin ETFs under his leadership. Under Clayton, the SEC also made it harder for startups to run ICOs and most other types of initial tokens sales.
However, Clayton’s willingness to work with Bitcoin-adjacent firms should not be entirely surprising, given that he stated that Bitcoin is not a security in 2018. Unlike other cryptocurrencies, Bitcoin never went through an ICO or any other fundraiser.
Along with serving on One River’s advisory council, Clayton will rejoin his former law firm Sullivan & Cromwell LLP as a policy council advisor. He will also act as non-executive Chair of Apollo Global Management Inc. and serve as Adjunct Professor at the University of Pennsylvania Carey Law School.
One River’s Cryptocurrency Bet
Prior to the economic crisis resulting from the response to COVID-19, One River CEO Eric Peters focused his strategy based on volatility, bringing in returns of around 35% in 2020.
The firm has made significant investments in Bitcoin. In November, it announced a$600 million Bitcoinpurchase. In recent statements,Peters additionally confirmed that One River plans to increase its Bitcoin and Ethereum holdings to $1 billion in the first half of 2021.
One River has also received financial backing from the Brevan Howard Asset Management Fund and Ruffer LLP.
At the time of writing this author held Bitcoin and less than $15 of altcoins.
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When Ruffer Investment wanted bitcoin in November it turned to One River Digital who went to Coinbase to hit the “buy” button on a purchase now worth over $745 million, Ruffer representative Jonathan Atkins confirmed to CoinDesk.
In a recent portfolio update, Ruffer alluded to the involvement of the “world’s largest custodian of digital assets” without naming names. “Access to the bitcoin is controlled by multi-layer security protocols,” Ruffer wrote of its cold-storage setup. A second source confirmed to CoinDesk that Coinbase was the custodian described in Ruffer’s portfolio update. Coinbase Custody announced last month it was storing over $20 billion in customer assets.
The revelation sheds light on how large investors are entering the bitcoin market: namely through trusted partners. Big bets in recent weeks by everyone from MassMutual to Guggenheim are seen as the driving force behind bitcoin’s current price rally.
As CoinDesk reported Tuesday, Ruffer invested 2.5% of its $27 billion portfolio into bitcoin in November. The following day, One River Digital, a crypto-focused offshoot of volatility hedge fund One River Asset Management, came out of stealth proclaiming it had already brokered $600 in bitcoin and ether for its institutional clients.
Coinbase confirmed on Wednesday that it was conducting trade execution and crypto custody for One River Digital. It declined to comment for this story.
Ruffer owns a stake in One River Digital. Billionaire hedge fund manager Alan Howard does as well. One River Digital did not respond to a request for comment.
The Ruffer revelation shows just how far San Francisco’s Coinbase is reaching into the world of corporate finance.
Earlier this month, it revealed itself as the “primary execution partner” for MicroStrategy’s $425 million bitcoin purchase in the fall. That blog post explained how Coinbase pulls off market-swamping allocations without alerting traders.
Meanwhile, Ruffer explained in its portfolio update that macroeconomic factors guided the manager’s bitcoin bet.
“The current macroeconomic environment is set up perfectly for an asset that blends the benefits of technology and gold,” Ruffer said, adding:
“Negative interest rates, extreme monetary policy, ballooning public debt, dissatisfaction with governments – all provide powerful tailwinds for bitcoin at a time when conventional safe-haven assets, particularly government bonds, are perilously expensive.”
Ruffer said bitcoin has grown to meet this moment.
“Since 2017, billions of dollars have been invested in the infrastructure needed to support this wave of bitcoin adoption; many of the impediments to institutional investors have been dismantled.”
Ruffer’s analysis was clear: the institutions are here with more on the way; the cypherpunks are fading fast. Wrote the $27 billion mega-manager:
“[Bitcoin] seems set to move from being loved by the anti-establishment to being embraced by the dominant interests of the establishment.”
