The financial press is awash this morning with reports that the launch of a bitcoin futures exchange-traded fund (a “BTC Futures ETF“) may be imminent.
Before recommending that clients invest directly in bitcoin or in a BTC Futures ETF, a registered investment adviser (RIA) should analyze:
- Its status as a commodity trading advisor (CTA) or a commodity pool operator (CPO) under the Commodity Exchange Act (CEA) and related rules adopted by the Commodity Futures Trading Commission (CFTC); and
- Whether an exemption from registration is available to it.
A CTA is a natural person or an entity that provides advice with respect to the purchase or sale of futures contracts and other derivatives for compensation, while a CPO is a natural person or an entity that operates a pooled investment vehicle that can invest in futures contracts and other derivatives.
There are statutory “de minimis” exclusions under the CEA and exemptions under CFTC rules that may – but not necessarily will – be available to an RIA.
We will explore the contours of several such exclusions and exemptions in subsequent posts, recognizing that the application of any exclusion or exemption is dependent upon the facts and circumstances unique to every RIA.
Good day. Caveat oeconomus consilio – RIAs take note, or something like that . DR2