Truth Social crypto ETF plans collapse as Yorkville pulls SEC filings

The effort to launch Truth Social-branded cryptocurrency exchange-traded funds has come to an abrupt stop after Yorkville America Digital, LLC, which was the sponsor of the ETFs application, wrote to the US Securities and Exchange Commission (SEC) requesting the withdrawal of the application.

Yorkville America Digital indicated that the decision was linked to a broader restructuring of its ETF plans and a shift toward a different regulatory framework.

The filings covered a proposed spot Bitcoin ETF and a combined Bitcoin and Ethereum ETF tied to Trump Media & Technology Group, the parent company of Truth Social.

The withdrawal came before the SEC reached a final decision on the applications, ending months of speculation around the products and their potential entry into the growing crypto ETF market.

The withdrawal also arrives at a time when the US spot crypto ETF market has become increasingly crowded.

Since the approval of spot Bitcoin ETFs in January 2024, large asset managers including BlackRock, Fidelity, and Grayscale have attracted billions of dollars in investor inflows, making it difficult for new issuers to gain market share.

Filing withdrawal ends months of SEC review

The Truth Social ETF applications had already faced delays from the SEC before the withdrawal was submitted.

Regulators previously postponed their decisions as part of the standard review process applied to crypto-related investment products.

The proposed funds aimed to provide direct exposure to Bitcoin and Ethereum through regulated exchange-traded structures.

Spot crypto ETFs hold the underlying digital assets directly rather than relying on futures contracts.

Interest in these products surged after the SEC approved the first batch of spot Bitcoin ETFs in early 2024.

According to data from SoSoValue, spot Bitcoin ETFs in the United States have collectively recorded tens of billions of dollars in cumulative net inflows since launch, led by BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund.

However, entering the market at this stage presents major challenges.

Several established ETF issuers have already lowered management fees in an attempt to attract investors.

Some funds even launched with temporary fee waivers to gain traction quickly.

Bloomberg ETF analyst James Seyffart said the competitive environment likely played a role in the withdrawal decision.

He noted that newer entrants face an uphill battle when competing against firms with established distribution networks, larger capital bases, and stronger institutional relationships.

The Truth Social filings also attracted attention because of their political connections.

Trump Media & Technology Group has remained closely tied to US President Donald Trump, making the ETF applications more visible than many other crypto investment proposals currently under SEC review.

Strategy shift for a different fund structure

Yorkville America Digital reportedly indicated that the withdrawal was part of a broader strategy change involving the legal structure of future investment products.

The original filings were structured under the Securities Act of 1933, which is commonly used for commodity-based ETFs, including spot Bitcoin funds.

The revised direction appears to focus on products governed under the Investment Company Act of 1940 instead.

The two frameworks operate differently and carry separate regulatory requirements.

Funds organised under the 1940 Act are often associated with stricter investor protection rules and different portfolio management standards.

While no replacement filings have been announced, the change suggests the companies may still be exploring crypto-related investment products through an alternative structure.