7RCC, a prominent asset manager, has taken a unique step in the realm of cryptocurrency investments by filing an application with the Securities and Exchange Commission (SEC) for a groundbreaking ESG focused Bitcoin ETF. What sets this proposed Exchange-Traded Fund (ETF) apart is its emphasis on addressing environmental concerns through the inclusion of carbon credits in its portfolio, making it an attractive option for environmentally conscious investors.
In the midst of the SEC’s anticipated approval of spot Bitcoin ETFs, 7RCC’s proposal diverges from the norm, targeting a specific group of investors keen on environmental, social, and governance (ESG) considerations. The move comes at a time when the negative narratives surrounding Bitcoin mining and its environmental impact have been prominent.
Rali Perduhova, the co-founder and CEO of 7RCC Global, highlighted the motivation behind the innovative ESG focused Bitcoin ETF: “There’s a lot of negative narratives around Bitcoin mining and the carbon footprint. We want to target that group of institutional investors that need that ESG tick mark.”
ESG investing has gained significant traction in recent years as investors increasingly prioritise environmental and social responsibility alongside financial returns. This strategy allows firms to adopt a socially conscious approach by selecting assets that address issues like climate change and diversity.
Despite some criticism, particularly from Republican lawmakers, a 2022 Harvard survey revealed that 81% of institutional investors in the U.S. plan to increase their allocations to ESG products over the next two years. The survey projected that assets under management in ESG-focused investments would double to $10.5 trillion by 2026.
The proposed ESG focused Bitcoin ETF, which would be traded under the ticker name BTCK, aims to pioneer a carbon-neutral trading strategy. It plans to achieve this by structuring its portfolio with 80% spot Bitcoin and 20% carbon credit futures. This blend is designed to counterbalance the environmental impact associated with Bitcoin mining, providing investors with exposure to the cryptocurrency while contributing to sustainability efforts.
While the S-1 filing on Monday did not delve into the ongoing debate about the mechanism for creating and redeeming Bitcoin ETF shares, it did reveal that 7RCC has chosen Gemini to serve as custodian and is leveraging the financial platform Tidal to white-label its ETF.
This proposed ETF represents 7RCC’s inaugural offering in the cryptocurrency space. The project has enlisted the expertise of Matthew Homer, a former executive deputy superintendent at the New York Department of Financial Services and managing member of the digital asset-focused venture firm Department of XYZ, as a senior advisor.
“There is definitely a huge conversation around ESG right now,” noted Perduhova. “It’s a lot of funds to capture.”
ESG, an acronym for Environmental, Social, and Governance, encompasses a set of criteria used to evaluate a company’s performance and impact in these three key areas. As investors increasingly prioritise sustainable and socially responsible practices, understanding these criteria becomes crucial:
This aspect evaluates a company’s commitment to sustainable practices, environmental responsibility, and efforts to mitigate its ecological footprint. It includes considerations such as energy efficiency, carbon emissions, waste management, and resource conservation.
Social factors assess a company’s impact on society, employees, and communities. This involves examining labour practices, diversity and inclusion, employee relations, community engagement, and overall contributions to social well-being.
Governance focuses on the structures and processes that guide corporate decision-making and behaviour. It includes aspects such as board composition, executive compensation, transparency, ethical business practices, and adherence to legal and regulatory frameworks.
As ESG considerations continue to gain prominence, businesses recognise the importance of integrating these principles into their strategies to foster sustainable and responsible practices. With 7RCC’s innovative approach, the intersection of cryptocurrency investments and ESG criteria takes a significant step forward, providing investors with an alternative that aligns with both financial goals and environmental consciousness.
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