Trump-affiliated company submits proposal for Exchange-Traded Fund based on Bitcoin
In a significant move, the Trump Media & Technology Group (TMTG) has announced plans to launch a Bitcoin spot Exchange-Traded Fund (ETF). This development comes as the New York Stock Exchange (NYSE) has filed an application for the 'Truth Social Bitcoin ETF' with the Securities and Exchange Commission (SEC).
If approved, the ETF will be managed by Yorkville America Equities, serving as the sponsor and registered investment advisor for the ETFs under the 'Truth Social Funds' brand. Crypto.com's subsidiary, Foris DAX Trust Company, will manage the Bitcoin for the ETF, while Crypto.com will support the backend technology, manage the custody, and provide the cryptocurrencies for the ETF.
Interestingly, Donald Trump, the former US president, is reported to own 'a lot' of Bitcoin. However, it remains unclear if Trump himself will have a direct involvement in the ETF. It is worth noting that Trump transferred his TMTG shares to an irrevocable trust fund prior to taking office. Donald Trump Jr., on the other hand, manages the majority of shares in TMTG, which Trump owns.
The decision to launch a pure Bitcoin ETF, rather than one containing a basket of cryptocurrencies as previously planned, could be a strategic move to focus on the most popular and widely traded cryptocurrency.
The move by TMTG into the Bitcoin ETF market is not without challenges. The market is already saturated with several large Bitcoin spot ETFs, making capturing market share a significant challenge for TMTG's ETF.
Tristan, the Editor-in-Chief at Blocktrainer.de and an economics graduate with journalistic experience outside the Bitcoin sphere, points out that the investment product associated with the former US president may not be a decisive factor for investors choosing TMTG's Bitcoin ETF over other well-established ETFs like BlackRock's IBIT.
In a bid to diversify its product portfolio, TMTG has partnered with Crypto.com for investment products around cryptocurrencies. This partnership could potentially lead to the launch of crypto ETFs containing a unique ETF basket of cryptocurrencies, including Bitcoin, Cronos, and other crypto assets.
TMTG has already raised nearly $2.5 billion through capital markets to build a Bitcoin reserve, indicating a strong commitment to its cryptocurrency ventures.
Tristan, who has been actively involved with Bitcoin since 2020 and previously explored libertarian economic theory, emphasizes that launching a company-associated Bitcoin ETF in a crowded category where several ETFs are already very favorable/liquid may present a challenge in terms of competition.
As we await the SEC's decision on the Truth Social Bitcoin ETF, it will be interesting to see how TMTG navigates this competitive landscape and carves out a space for itself in the Bitcoin ETF market.
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