Bitcoin ETF: Cathie Wood’s Ark Invest has resubmitted its application for a Bitcoin spot exchange-traded fund (ETF), introducing new risk warnings and making minor adjustments in a renewed effort to gain regulatory approval.
The latest version of the application, filed on October 11, reflects Ark Invest’s determination to address concerns raised by the U.S. Securities and Exchange Commission (SEC) following the rejection of their initial application in 2021. These changes include additional warnings about risks associated with the Bitcoin network, which could impact the price of the ETF.
Among the new risks highlighted in the amended application are concerns about electricity consumption, a community-driven upgrade to Bitcoin’s source code, and intensifying competition within the cryptocurrency industry. These risk factors are crucial for potential investors to consider as they evaluate the viability of a Bitcoin ETF.
One notable change in the application is the stipulation that Coinbase, a leading cryptocurrency exchange, will serve as the custodian of the assets backing the ETF. The application specifies that these assets will be held in segregated addresses on the Bitcoin blockchain, ensuring they are not “commingled with corporate or other customer assets.” This move is a proactive response to concerns related to the commingling of user funds and regulatory scrutiny, exemplified by the trial of Sam Bankman-Fried, co-founder of the now-defunct FTX exchange.
Ark Invest initially resubmitted its Bitcoin ETF application in April of this year, aiming to overcome the regulatory hurdles that led to the rejection of its first application in 2021. This resubmission coincided with the submission of a Bitcoin ETF application by BlackRock, a heavyweight in the investment management industry.
Bitcoin ETF Application
In July, Ark Invest made additional adjustments to the application to align it more closely with BlackRock’s proposal, addressing the SEC’s concerns about market manipulation and adding a surveillance-sharing agreement. Despite the previous rejections and modifications, the latest amendment to the application is described as containing “minor edits and details” by Alistair Milne, a prominent Bitcoin investor and co-founder and CIO at Altana Digital Currency Fund.
These minor edits reflect Ark Invest’s dedication to addressing feedback from the SEC as they actively engage with regulatory authorities for the first time. The new filing adds environmental concerns and the potential effects of illicit transactions as additional factors that could “adversely affect the bitcoin industry and an investment in the Trust.”
Eric Balchunaus, an ETF expert at Bloomberg, noted that there are “five extra pages” in this latest filing, with changes “sprinkled throughout.” He described these alterations as a “good sign” and “solid progress” toward the eventual approval of the industry’s first spot Bitcoin ETF.
While the path to a Bitcoin ETF approval remains challenging, Ark Invest’s ongoing efforts to refine their application demonstrate their commitment to making the investment vehicle a reality for interested investors and further advancing the cryptocurrency industry’s integration into traditional financial markets.