September
7, 2022
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Ms.
Jessica Livingston
Division
of Corporation Finance
U.S.
Securities and Exchange Commission
100 F
Street, NE
Washington,
DC 20549
|
Re:
Teucrium
Commodity Trust
Amendment
No. 5 to
Registration
Statement on Form S-1
Filed
August 24, 2022
File
No. 333-256339
Dear
Ms. Livingston:
On behalf
of the sponsor, Teucrium Trading LLC (the “Sponsor”),
and the Hashdex Bitcoin Futures Fund (the “Fund”), a
series of the Teucrium Commodity Trust (the “Trust”),
we are responding to your comments dated September 6, 2022 in
regard to the Fund’s amended registration statement on Form
S-1 filed on August 24, 2022 (the “Registration
Statement”). All capitalized terms not defined herein shall
have the meaning assigned to them in the Registration
Statement.
Please
note that the page numbers in the Staff's comments may no longer
apply due to the deletion or addition of disclosure. Accordingly,
we have included new page numbers in our responses corresponding to
the newly revised disclosure. For convenience, each of the
Staff’s comments are restated below, with the response
following.
Pre-Effective Amendment No. 5 to Form S-1 Filed August 24,
2022
General
1.
Comment:
Refer to your response to comment 1. Please tell us how you
considered whether the transaction effecting the transfer of assets
to the New Fund will be registered or exempt under the Securities
Act. Please also:
●
describe the
"long-term business goals" furthered by transferring sponsorship of
the Fund from the Sponsor to Toroso in sufficient detail so that a
prospective investor can evaluate how your goals, objectives, and
strategy may impact an investment in the Fund; and
●
disclose in an
appropriate place that the transaction may require registration (or
an exemption), an amendment to the Fund's existing listing
standards, and receipt of other regulatory approvals and how you
will inform shareholders that the definitive transaction has been
consummated.
Response:
For the
information of the staff, the Support Agreement (the "Agreement")
outlines the general structure of the proposed transfer of assets
from the Fund to the New Fund (the "Transaction"). This provision
was drafted broadly because additional details regarding the
structure of the Transaction and the formalization of the
respective roles of the parties to the Agreement (the "Parties")
will be necessary before the Transaction can be fully analyzed to
determine corresponding registration requirements.
Generally speaking,
the first element of this registration analysis will be whether the
Transaction, because shareholders are not required to vote, will
constitute an exchange by Fund shareholders of their shares for a
new security.1 The Transaction is not expected to
materially modify the rights of Fund shareholders. In a similar
situation, the SEC staff provided no-action assurances under
Section 5 of the Securities Act and Rule 145 thereunder when the
terms of the security were not impacted and the issuer's rights and
obligations were not changed. In this regard, the Preliminary Note
to Rule 145 explains that the "thrust of the rule is that an
offer, offer to sell, offer for
sale, or sale occurs
when there is submitted to security holders a plan or agreement
pursuant to which such holders are required to elect, on the basis
of what is in substance a new investment decision, whether to
accept a new or different security in exchange for their existing
security."2
2 See, e.g., The Manufacturers Life Insurance Company of
North America, SEC No-Action letter dated December 27, 2001
(SEC staff would not
recommend enforcement action to the Commission under Section 5 of
the 1933 Act and Rule 145 thereunder if, without registration
under the Securities Act, target insurer transfers to surviving
insurer assets equal to the reserves and other liabilities under a
registered investment option under certain variable annuity
contracts, as a result of which the surviving insurer would assume
all of the obligations and responsibilities of the target insurer
and the terms of the investment options would not be
changed).
If the
Transaction were determined to constitute an exchange of a new
security (in the form of shares issued by the New Fund) for shares
of the Fund, absent an applicable exemption, the Transaction would
be required to be registered under the Securities Act. In light of
the expectation that the terms of the shares of the New Fund are
not expected to be materially modified, the Parties do not expect
to rely on any registration exemption.
The
Registration Statement has been revised to include the following
disclosure about the long-term business goals of the
Parties:
Specifically,
Hashdex and Toroso have experience in the digital asset and
exchange-traded fund industry, and seek to offer a bitcoin futures
based fund as part of their long-term business goals. The Parties
believe that the Sponsor is best positioned for the initial
establishment and operation of the Fund, given the Sponsor’s
experience in forming and operating similarly structured
exchanged-traded products registered under the Securities Act of
1933 (the “1933 Act”). Accordingly, the Sponsor is
responsible for the initial creation and operation of the Fund.
Then, when Hashdex and Toroso have the necessary experience and
resources to operate the Fund, the eventual transfer to Toroso will
effectuate Hashdex and Toroso’s long-term business goals. The
Parties do not believe that the long-term business goals will have
any impact on a shareholder’s investment in the
Fund.
The
Registration Statement has also been revised to include the
following disclosure:
The
transaction may require registration under the 1933 Act, or an
exemption from such registration, an amendment to the Fund’s
existing listing standards and receipt of other regulatory
approvals. The Fund and the New Fund will file current reports on
Form 8-K including a press release notifying shareholders that the
definitive transaction has been consummated.
What Are the Risk Factors Involved with an Investment in the
Fund
The price of bitcoin can be volatile which could cause large
fluctuations in the price of Shares., page 27
1.
Comment: Refer
to your response to comment 25 from our letter dated June 30, 2022.
Please update this risk factor by quantifying any significant
single day price declines that have occurred since September 7,
2021.
Response:
The Registrant has
updated the table in the noted risk factor to reflect additional
significant single day price declines that have occurred since
September 7, 2021.
Please
contact the undersigned at (202) 312-3331 (tconner@vedderprice.com)
or John Sanders at (202) 312-3332 (jsanders@vedderprice.com) with
any questions or comments.
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Very
truly yours,
W.
Thomas ConnerShareholder
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cc:
Cory
Mullen-Rusin