S-1/A: 7RCC Spot Bitcoin & Carbon Credit Futures ETF Files S-1/A

Teucrium Commodity Trust's 7RCC Spot Bitcoin and Carbon Credit Futures ETF files an amended registration statement detailing its 80% Bitcoin and 20% Carbon Credit Futures investment strategy.

Summary

• The 7RCC Spot Bitcoin and Carbon Credit Futures ETF (BTCK) aims to track the daily price changes of Bitcoin and Carbon Credit Futures, as represented by the 7RCC Kaiko Bitcoin Carbon Credit Index, less expenses from the Fund's operations.
• The Fund's investment strategy is to hold approximately 80% of its assets in Bitcoin and 20% in Carbon Credit Futures.
• Carbon Credit Futures are linked to emissions allowances under the European Union Emissions Trading System (EU ETS), California Cap and Trade (CCA), and Regional Greenhouse Gas Initiative (RGGI).
• Shares of the Fund will trade on the NYSE Arca under the symbol BTCK.
• Creation Baskets (10,000 Shares) and Redemption Baskets (10,000 Shares) are offered to Authorized Purchasers for Bitcoin, cash, and/or cash equivalents.
• The Sponsor, Teucrium Trading, LLC, receives an annual management fee of 0.68% of the Fund's average daily net assets and contractually agrees to pay most routine operational, administrative, and ordinary expenses, excluding brokerage fees, interest expenses, and certain non-recurring or extraordinary fees.
• The estimated return needed for a hypothetical investment to break even over 12 months, assuming an initial selling price of $25.00 per Share, is 0.44% or $0.11.
• Gemini Trust Company, LLC serves as the Bitcoin Custodian, and U.S. Bank, N.A. serves as the Non-Digital Custodian for cash and cash equivalents.
• As of December 10, 2025, the Fund had $100 in cash and 4 shares outstanding, with a Net Asset Value (NAV) per share of $25.00.
• 7RCC Global Inc. is expected to purchase the initial Seed Baskets of 10,000 Shares for $250,000 ($25.00 per share).

Sentiment

Score: 6

Explanation: The filing details the planned launch of a new ETF with a unique investment strategy combining Bitcoin and carbon credits. While it provides comprehensive operational and risk disclosures, it reports no actual performance, making it a forward-looking document. The detailed risk factors for both digital assets and carbon markets, coupled with regulatory uncertainties, temper enthusiasm, but the robust custody arrangements and contractual fee structure are positive.

Positives

• The Fund provides investors with a cost-effective means to gain price exposure to Bitcoin and regulated emissions-allowance futures markets.
• The investment strategy aims for environmental responsibility by including exposure to carbon credits.
• The Sponsor contractually agrees to pay most routine operational, administrative, and ordinary expenses, reducing the direct cost burden on the Fund.
• Gemini Trust Company, LLC, the Bitcoin Custodian, is a New York State-chartered limited purpose trust company, a fiduciary under NYBL Section 100, and holds SOC 1 Type II and SOC 2 Type II certifications for custody, indicating robust security standards.
• Gemini maintains insurance coverage for digital assets custodied, including for fraud, theft, and cyber-security breaches, though this is shared with other customers.
• The Fund's assets are split among two custodians (Gemini for Bitcoin, U.S. Bank for cash/cash equivalents), diversifying custody risk.
• The interseries limitation on liability aims to protect the Fund from liabilities of other series within the Teucrium Commodity Trust.
• The Sponsor has an information security program and policy in place, including regular employee training and annual reviews.

Negatives

• The Fund is new and has no performance history, posing higher risks than established funds.
• The Fund is not actively managed, meaning it will not attempt to profit from speculative trading or avoid losses in declining markets.
• High volatility of Bitcoin prices can significantly impact the value of Shares.
• Digital asset markets are largely unregulated, leading to risks of fraud, security failures, operational problems, and potential price manipulation.
• Regulatory uncertainty in digital asset markets could lead to adverse legislative or regulatory developments, potentially harming Bitcoin's value or the Fund's operations.
• The Fund's investment in Carbon Credit Futures exposes it to commodity-linked derivative risks, which can be greater than direct commodity investment.
• The Carbon Credit Futures market may experience contango, where later-expiring contracts are more expensive, negatively impacting returns when rolling positions.
• Position limits and margin requirements for Carbon Credit Futures can cause tracking error and limit the Fund's ability to fully implement its investment strategy.
• The Fund has a limited number of Authorized Purchasers, and their withdrawal or inability to act could lead to Shares trading at a discount to NAV.
• The lack of full insurance and limited legal recourse against service providers expose the Fund to potential losses not fully covered.
• The Fund does not distribute dividends, which may be a negative for investors needing cash distributions for tax purposes.
• Potential conflicts of interest exist between the Sponsor and the Fund, as the Sponsor may prioritize its own interests.
• The Fund's NAV calculation methodology for Bitcoin may not be consistent with GAAP, leading to potential differences in reported financial statements.
• The Fund is subject to U.S. federal and state income tax at corporate rates, which is uncommon for investment funds.
• The Bitcoin Custodian's liability is limited under the Bitcoin Custody Agreement, potentially leaving the Fund exposed to losses.
• The Clearing Account, being an omnibus account, means the Fund would likely be treated as a general unsecured creditor in case of the Bitcoin Custodian's insolvency.
• The Fund will abandon Incidental Rights and IR Virtual Currency (e.g., from forks or airdrops), meaning shareholders will not benefit from them.

Risks

• Extreme volatility in Bitcoin prices, including steep drawdowns, could materially adversely affect the value of Shares.
• Digital assets represent a new and rapidly evolving industry, and the value of Shares depends on Bitcoin's acceptance.
• Competition from other digital assets or investment methods could negatively impact Bitcoin's price.
• Digital assets are bearer instruments; loss, theft, destruction, or compromise of private keys could result in permanent loss of the asset.
• Unregulated nature and lack of transparency of digital asset exchanges may lead to fraud, security failures, or operational problems.
• Geopolitical or economic events could motivate large-scale sales of Bitcoin, reducing its value.
• Changes in Bitcoin network governance may not receive sufficient support, affecting growth and responsiveness.
• Security threats to the Bitcoin Custodian could halt operations, cause asset loss, or damage reputation.
• Bitcoin transactions are irrevocable; stolen or incorrectly transferred Bitcoin may be irretrievable.
• Lack of full insurance and limited legal recourse against service providers expose the Fund to loss of Bitcoin.
• Regulatory uncertainty in U.S. digital asset markets, including potential bans, restrictions, or onerous conditions on Bitcoin use or mining.
• Unclear U.S. federal income tax treatment of digital asset transactions.
• No assurance that cap-and-trade regimes will continue to exist; new technologies could diminish their need.
• Emissions limits allocations may not properly reflect stable credit prices, leading to large price volatility in Carbon Credit Futures.
• Legislative or regulatory changes could impact cap-and-trade regimes, negatively affecting carbon credit values and market liquidity.
• Investments in commodity-linked derivatives (Carbon Credit Futures) involve greater risks than direct commodity investment, including leverage, liquidity, valuation, market, counterparty, and credit risks.
• Exposure to multiple geographic risks (EU, California, Eastern U.S.) due to Carbon Credit Futures.
• Contango in futures markets could negatively impact the Fund's NAV and total return when rolling positions.
• Position limits and margin requirements may cause tracking error between the Fund and the Index.
• The Fund is a commodity pool subject to CFTC and NFA regulation, potentially increasing compliance costs.
• The Index has a limited history and may perform in unanticipated ways; errors in its compilation could adversely affect the Fund.
• The Bitcoin Price used by the Index may be volatile and fail to track the global Bitcoin price.
• The Bitcoin Price used for NAV may not be consistent with GAAP, leading to differences in financial statements.
• Shareholders have no rights to participate in Fund management and must rely on the Sponsor's judgment.
• The Fund pays fees and expenses regardless of profitability, potentially depleting assets if investment performance doesn't exceed them.
• The Fund is not actively managed and may sustain avoidable losses.
• The Fund may become leveraged, leading to substantial losses if trading positions suddenly turn unprofitable.
• Future regulatory changes in commodity interest transactions could adversely affect the Fund.
• Failures or breaches of electronic systems of the Fund or third parties could disrupt operations and cause financial losses.
• Geopolitical events (e.g., Russia-Ukraine, Middle East conflicts) can cause volatility in commodity prices.
• Limited number of Futures Commission Merchants (FCMs) and potential imposition of risk mitigation procedures by FCMs.
• Backwardation in futures contracts can benefit the Fund, but contango can negatively impact it.
• Suspension of creation/redemption ability for Authorized Purchasers could lead to Shares trading at a premium or discount.
• The Fund is new, with limited operating history, and may face wider bid-ask spreads, trading at a greater premium/discount, or liquidation.
• Regulatory changes requiring Authorized Purchasers to register as money service businesses could increase costs and reduce liquidity.
• Risks and tax considerations related to Bitcoin disposition in creation/redemption transactions.
• Potential conflicts of interest between the Sponsor/affiliates and the Fund.
• Limited voting rights for shareholders.
• Limited liability of Sponsor and Trustee; Fund may need to indemnify them.
• Sponsor's continued services are not assured; discontinuance could be detrimental.
• Fund could terminate at any time, causing liquidation and potential loss of investment.
• Assets held by the Fund are not subject to FDIC or SIPC protections.
• Custodians' limited liability may impair recovery of losses.
• Fund may not have adequate sources of recovery if assets are lost, stolen, or destroyed.
• Errors, discontinuance, or changes in NAV valuation by the Administrator could adversely affect Shares.
• Sale of Bitcoin and Carbon Credit Futures to pay extraordinary expenses at low prices could negatively impact Shares.
• Intellectual property rights claims could result in significant costs or termination.
• Affiliates of the Sponsor may invest in or trade Bitcoin and/or carbon credit futures without regard to the Fund's interests.
• Stale pricing when underlying markets are closed can cause deviations between indicative fund value and NAV.

Future Outlook

The Fund's investment objective is to reflect the daily changes of the price of Bitcoin and Carbon Credit Futures, less expenses. The Sponsor expects to maintain the Fund's average daily tracking error against the Index below 10% over any 30 trading days and believes its Bitcoin valuation methodology is reasonably resistant to price manipulation. Market arbitrage opportunities are expected to keep the market price of Shares closely tracking the Fund's NAV. The Sponsor anticipates that the need to fair value Bitcoin or Carbon Credit Futures will not be a common occurrence. All entities holding or trading the Fund's assets are expected to be based in the United States and subject to U.S. regulations. The next Bitcoin halving is estimated to occur in 2028, and the 21 million Bitcoin supply cap is estimated to be reached by 2140. The U.S. withdrawal from the Paris Agreement is set to become effective in 2026.

Management Comments

• "The Sponsor believes this methodology provides a reasonable valuation of the spot price of bitcoin that is reasonably resistant to price manipulation of bitcoin."
• "The Sponsor believes that by investing in bitcoin and Carbon Credit Futures the Funds NAV will closely track the performance of the Index, before the consideration of expenses from the Funds operations."
• "The Sponsor also believes that because of market arbitrage opportunities, the market price at which investors will purchase and sell Shares through their brokerdealer will closely track the Funds NAV."
• "The Sponsor believes that the net effect of these relationships is that the Funds market price on the NYSE Arca at which investors purchase and sell Shares will closely mirror a basket of 80% bitcoin and 20% Carbon Credit Futures."
• "The Sponsor does not anticipate that the need to fair value bitcoin or Carbon Credit Futures will be a common occurrence."
• "The Sponsor believes that the Security Procedures that the Sponsor and Bitcoin Custodian utilize are reasonably designed to safeguard the Funds assets from theft, loss, destruction or other issues relating to hackers and technological attack."

Industry Context

The filing introduces a new Exchange Traded Fund (ETF) that combines exposure to Bitcoin and Carbon Credit Futures, positioning it within the growing digital asset investment space and the emerging environmentally conscious investment trend. It highlights the evolving regulatory landscape for digital assets, noting increased scrutiny from U.S. federal and state agencies (SEC, CFTC, FinCEN) and recent enforcement actions against major digital asset exchanges (Coinbase, Binance, Kraken), indicating a push towards a clearer regulatory framework. The ETF's strategy of investing in Carbon Credit Futures (EU ETS, CCA, RGGI) aligns with global efforts to combat climate change through cap-and-trade regimes, reflecting a broader industry trend towards ESG-focused financial products. The document acknowledges the inherent volatility and newness of the digital asset industry, contrasting it with more traditional asset classes and regulated markets. It references the impact of macroeconomic conditions, geopolitical instability (e.g., Russia-Ukraine conflict), and public health emergencies on commodity prices and market volatility, which are relevant to both Bitcoin and Carbon Credit Futures markets. The use of multiple custodians (Gemini for Bitcoin, U.S. Bank for cash) reflects industry best practices for asset segregation and risk management in the digital asset space.

Comparison to Industry Standards

• The Bitcoin Custodian (Gemini) is a New York State-chartered limited purpose trust company, a fiduciary under NYBL Section 100, and holds SOC 1 Type II and SOC 2 Type II certifications for custody, which are considered high standards in the digital asset custody industry.
• The Fund's investment strategy of 80% Bitcoin and 20% Carbon Credit Futures is unique, combining exposure to a volatile digital asset with an ESG-aligned commodity derivative, differentiating it from single-asset Bitcoin ETFs or traditional commodity funds.
• The use of a time-weighted average price and median price from multiple digital asset trading platforms (Bitstamp, Crypto.com, Gemini, itBit, Kraken) for Bitcoin valuation is presented as a methodology 'reasonably resistant to price manipulation,' which is a key concern in the digital asset market compared to more regulated traditional exchanges.
• The Fund's breakeven point of 0.44% or $0.11 per share over 12 months, with a 0.68% annual Sponsor Fee, can be compared to fees and expense ratios of other ETFs, particularly those in the digital asset or commodity space, to assess its competitiveness.
• The document notes that 'many digital asset exchanges are unlicensed, unregulated, operate without extensive supervision by governmental authorities,' contrasting them with 'regulated U.S. securities and commodities markets,' highlighting a gap in industry standards for digital asset trading venues.
• The interseries limitation on liability for the Delaware statutory trust structure is a standard legal protection for multi-series trusts, aiming to segregate liabilities across different funds.

Management Changes

Corporate Governance

Legal Proceedings

• A settlement agreement was entered into as of April 26, 2024, and became effective on May 10, 2024, resolving claims in 'Dale Riker v. Sal Gilbertie et al.,' 'Sal Gilbertie, et. al. v. Dale Riker, et al.,' and 'Dale Riker, et al. v. Teucrium Trading, LLC.'
• ADM Investor Services, Inc. (FCM) was subject to a CFTC order on July 12, 2019, for failing to diligently supervise employees and agents, resulting in a $250,000 civil monetary penalty.
• ADM Investor Services, Inc. (FCM) was subject to a Commodity Exchange Business Conduct Committee Panel order on January 28, 2020, for failing to require accurate reporting and properly supervise employees, resulting in a $650,000 fine.
• ADM Investor Services, Inc. (FCM) was subject to a CFTC order on September 29, 2022, for failing to supervise employees and agents regarding improper trade transfer requests, resulting in a $500,000 civil monetary fine.
• ADM Investor Services, Inc. (FCM) was subject to a Chicago Board of Trade Business Conduct Committee Panel order on September 19, 2023, for failing to diligently supervise employees and agents in handling accounts, resulting in a $450,000 fine (allocated across companion cases).
• ADM Investor Services, Inc. (FCM) was subject to a Commodity Exchange Business Conduct Committee Panel order on September 19, 2023, for failing to diligently supervise employees and agents in handling accounts, resulting in a $450,000 fine (allocated across companion cases).
• ADM Investor Services, Inc. (FCM) was subject to a Chicago Mercantile Exchange Business Conduct Committee Panel order on September 19, 2023, for failing to diligently supervise employees and agents in handling accounts, resulting in a $450,000 fine (allocated across companion cases).

Related Party Transactions

• Teucrium Investment Advisors, LLC is a wholly owned subsidiary of Teucrium Trading, LLC (Sponsor).
• 7RCC Global Inc. (7RCC) is expected to purchase the initial Seed Baskets of Shares and has agreements with the Sponsor regarding marketing, promotion, and operation of the Fund, receiving profits from the Sponsor Fee after operational costs and covering shortfalls if the Sponsor Fee is insufficient.
• U.S. Bancorp Fund Services, LLC (Administrator, Transfer Agent, Fund Accountant) is an entity affiliated with U.S. Bank, N.A. (Non-Digital Custodian).
• BGC Environmental Brokerage Services (an executing broker) is an indirect subsidiary of GFI Group LLC, which is a principal of the Sponsor, creating a potential conflict of interest regarding its retention as an executing broker.
• An affiliate of the Sponsor acts as investment manager to the Circle Reserve Fund, which the issuer of USDC uses to hold reserves backing USDC stablecoins. An affiliate of the Sponsor has a minority equity interest in the issuer of USDC.

Stakeholder Impact

• Shareholders: Will gain indirect exposure to Bitcoin and Carbon Credit Futures, but are subject to high volatility, regulatory risks, and potential for shares to trade at a premium/discount to NAV. They have limited voting rights and will not receive cash distributions for tax purposes. They will also not benefit from Bitcoin forks/airdrops.
• Sponsor (Teucrium Trading, LLC): Receives a management fee (0.68% annually) and is responsible for managing the Fund. Bears initial organizational and certain ordinary expenses. Faces potential conflicts of interest due to managing other funds and affiliates' interests.
• 7RCC Global Inc.: Expected to purchase initial Seed Baskets. Receives profits from the Sponsor Fee after operational costs, and will cover shortfalls if the Sponsor Fee is insufficient, aligning its financial interest with the Fund's operational efficiency.
• Gemini Trust Company, LLC (Bitcoin Custodian/Trading Counterparty): Provides custody and trading services for Bitcoin, earning fees. Its liability is limited under the Bitcoin Custody Agreement, potentially exposing the Fund to losses not fully covered.
• U.S. Bank, N.A. (Non-Digital Custodian): Provides custody for cash and cash equivalents, earning fees. The Fund is exposed to risks associated with its potential insolvency.
• U.S. Bancorp Fund Services, LLC (Administrator, Transfer Agent, Fund Accountant): Provides administrative services, earning fees.
• PINE Distributors LLC (Marketing Agent): Receives fees for marketing services, incentivizing promotion of the Fund.
• ADM Investor Services, Inc. (FCM): Serves as clearing broker for Carbon Credit Futures, earning commissions. Its history of regulatory fines for supervision failures poses a risk to the Fund's operations.
• Regulators (SEC, CFTC, NFA, FinCEN, NYDFS): The filing highlights ongoing regulatory scrutiny and evolving frameworks for digital assets and commodity pools, impacting compliance requirements and potential enforcement actions across the industry.

Next Steps

• The Fund will be listed for trading on the NYSE Arca under the ticker symbol BTCK.
• The Sponsor will file a current report on Form 8-K and a prospectus supplement to describe any changes to the Fund's investment objective, Index, or strategies.
• The Fund will notify Shareholders of any material change in the methodology of the Index or sub-indexes in a prospectus supplement and/or a current report on Form 8-K or in its annual or quarterly reports.
• The Sponsor will continuously review all approved Bitcoin Trading Counterparties.
• The Sponsor will monitor for significant events related to crypto assets and/or carbon credits that may impact the value of Bitcoin or Carbon Credit Futures and will determine whether to fair value the Fund's assets.
• The Trust will furnish annual reports and monthly reports to shareholders.
• The Trust will file quarterly and annual reports with the SEC.
• The next Bitcoin halving is estimated to occur in 2028.
• The U.S. withdrawal from the Paris Agreement is set to become effective in 2026.

Key Dates

Recommendation

This is a registration statement for a new ETF, not a performance report. While it outlines a unique investment strategy combining Bitcoin and carbon credits with robust custody arrangements, it also details significant risks associated with digital asset volatility, regulatory uncertainty, and commodity derivatives. Without actual performance data or a clear market reaction to its launch, a 'hold' recommendation is appropriate for investors to observe its initial trading and how it navigates the outlined risks and market conditions. The contractual fee structure and experienced management are positive, but the inherent risks of the underlying assets and the newness of the fund warrant caution.

Keywords

Bitcoin ETF, Carbon Credit Futures, Digital Assets, Commodity Pool, SEC Filing, Teucrium Commodity Trust, Gemini Trust Company, LLC, NYSE Arca, BTCK, Cryptocurrency, ESG Investing, Futures Contracts, Emissions Allowances, EU ETS, California Cap and Trade, RGGI, Financial Regulation, Risk Management, Investment Fund