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In an unprecedented move, a sitting U.S. president could soon be an issuer of exchange traded funds. Earlier this month, Truth Social, the conservative social media platform controlled by President Trump’s Trump Media & Technology Group (TMTG), filed an S-1 for a spot bitcoin ETF.
On Monday, it was revealed that the Securities and Exchange Commission (SEC) acknowledged receiving that filing NYSE Arca, which would be the listing venue for the Truth Social Bitcoin ETF. A separate document filed on the same day indicates the social media company wants to bring to market the Truth Social Bitcoin and Ethereum ETF.
The filings aren’t surprising because just weeks after Inauguration Day, Trump Media and Technology filed trademark applications for three ETFs and three separately managed account (SMA). Specific to Trump’s designs on cryptocurrency ETFs, that’s hardly surprising because, love him or hate him, he’s availed himself to be the most crypto-friendly president to date. His desire to capitalize on the groundswell of crypto enthusiasm, controversial as it may be to some, isn’t surprising, either.
As advisors and ETF experts know, filings with the SEC don’t guarantee approval, but the commission is led by Paul Atkins – the president’s appointee to that role. Plenty of conjecture and speculation can be made of that, but it’d be stunning if the SEC rejects ETF applications from the president’s company, particularly while he’s in office. While there are instances of ETF filings taking awhile to work through regulatory channels, the Trump filings would bring to market competitors to established funds, meaning regulatory hang-ups are unlikely.
Examining Trump Crypto ETFs
If approved, the Truth Social Bitcoin ETF would be the 12th spot bitcoin ETF signed off on by the SEC since January 2024. In other words, if that fund comes to market, it will enter a highly competitive arena – one populated by products sponsored by well-known issuers, many of which have already gained considerable traction among advisors. There’s also an important detail in the filing for that ETF.
“Prospective Shareholders should be aware that such persons may take positions in bitcoin which are opposite, or ahead of, the positions taken for the Trust. There can be no assurance that any of the foregoing will not have an adverse effect on the performance of the Trust,” according to the document.
In other words, it’s possible that at some point, the Truth Social Bitcoin ETF could front-run its buyers or even take positions against them.
Regarding the Truth Social Bitcoin and Ethereum ETF, a number of Bitcoin-Ethereum ETFs already exist, but with varying strategies. Some use futures on the two largest digital currencies while others track indexes. Some of these combination funds use equal weighting while others weigh the two cryptocurrencies by market value. The Truth Social offering, if it comes to market, will hold the two asset on a 3-to-1 basis favoring bitcoin.
Assessing Odds of Trump Crypto ETF Success
This isn’t a political statement, but it’s reasonable to say the odds of success for the Trump crypto ETFs are fair because while both are entering segments with established rivals, they do enjoy a key advantage not found with all rookie ETFs: brand recognition.
That’s not to say Trump and Truth Social are synonymous with ETFs. They’re not, but the Trump brand is recognizable. So it’s possible some investors will be lured to these products simply because the ETFs are tied to the president.
Then there’s the matter of fees. Filings for the Truth Social Bitcoin ETF and the Truth Social Bitcoin and Ethereum ETF don’t yet contain information regarding annual expense ratios. The most expensive ETF in the spot bitcoin category is the Grayscale Bitcoin Trust (GBTC), which charges 1.50% per year, but that’s an outlier because that issuer has a low-cost equivalent that charges just 0.15% annually. Translation: for the Truth Social Bitcoin ETF to be competitive, its expense ratio likely should not exceed 0.40% annually.
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