Ark’s Revised Bitcoin ETF Filing Seen ‘Hugely Positive’

ARK Invest and 21Shares filed an amendment to their bitcoin spot exchange-traded fund (ETF) application that analysts say may bring it closer to a historic approval.

The modified application, archived on October 11, provides additional details focusing in particular on asset custody practices and asset valuation methods.

“It means ARK received the SEC’s comments and has addressed them all, and is now putting the ball back in the SEC’s court,” tweeted Bloomberg Intelligence analyst Eric Balchunas, referring to the Securities and Exchange Commission for its initials. “In my opinion, good sign, solid progress.”

There are 5 additional pages in the new S-1, but the new material is scattered throughout as in the previous two examples. So what does this mean? It means ARK took the SEC’s feedback and dealt with it all, and now puts the ball back in the SEC’s court. In my opinion, good sign, solid progress.

– Eric Balchunas (@EricBalchunas) October 11, 2023

Changes to the ARK bitcoin ETF App

The analyst said the SEC sent an email to fund managers looking to launch spot bitcoin ETFs a few weeks ago with comments and questions it wanted to address.

One notable change introduced in the latest amendment relates to how ARK would calculate the net asset value (NAV) of its fund, which was not in line with Generally Accepted Accounting Principles (GAAP), a standard used by the SEC.

Agree with Scott (who by the way is a lawyer on this topic). I also heard separately that none of the feedback was that new or insurmountable, which probably explains why ARK was able to address it all in two weeks. We are now waiting for the rest of the group to present their updates. https://t.co/y3ND79d9Tq

– Eric Balchunas (@EricBalchunas) October 11, 2023

The new filing also clarifies that ETF assets are held in segregated accounts by Coinbase Custody. Therefore, ETF funds cannot be mixed with corporate or other client assets, the analyst noted.

“There may very well be some back and forth with the SEC over these small but diabolical details,” he said. “So I wouldn’t say approval is imminent, but I would say the fact that issuers are in a ‘back and forth’ with the SEC on this is hugely positive.”

Pressure on the SEC to approve bitcoin spot ETFs intensified after Grayscale Investments won a historic court victory over the SEC, when a judge called the regulator’s decision to approve bitcoin futures ETFs, but not ETFs of bitcoin spot, as “arbitrary and capricious.”

Former BlackRock head Steven Schoenfield says bitcoin spot ETFs could be approved as early as January and could attract as much as 200 billion dollars for bitcoin investment products.

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