- The latest Bitcoin ETF application details how fund assets are “not commingled” with company or other client assets.
- Analysts noted how the latest filing allayed almost all of the SEC’s concerns.
On October 11, Cathie Wood’s ARK Invest and 21Shares altered their shared place Bitcoin [BTC] Exchange Traded Fund (ETF) application and filed with the U.S. Securities and Exchange Commission (SEC).
The latest application contains additional information on how the ETF would manage assets and determine the value of assets. It also describes how assets for the fund are held in segregated wallet addresses on the Bitcoin blockchain. It also noted that ETF assets are “not commingled” with corporate or other client assets.
The SEC previously criticized Bitcoin ETF filings for insufficient surveillance-sharing agreements (SSAs). In response, ARK Invest and 21Shares included an SSA in an amended filing filed in June.
The deal was a joint effort between ARK Invest, 21 stocks, the Chicago Board Options Exchange (CBOE) BZX Exchange and a crypto platform. However, the filing did not specify the crypto platform.
However, it claimed that the platform was responsible for a “substantial portion of US-based Bitcoin trading.”
Addressing SEC concerns
Eric Balchunas, a senior Bloomberg ETF analyst, noted that it’s entirely possible that the latest ETF filing will address all of the SEC’s concerns.
He also referred to a section in which the filing highlighted that certain valuation methods used by the aforementioned ETF were not in accordance with generally accepted accounting principles (GAAP) in the US.
Okay, here’s one change: Under NAV calculations (something we’ve heard the SEC comment on), the new prospectus includes information about how the NAV calculation is NOT in accordance with GAAP accounting. Keep a close eye @JSeyff pic.twitter.com/jdINXQjKrd
— Eric Balchunas (@EricBalchunas) October 11, 2023
Balchunas noted that ARK Invest and 21Shares have put the ball back in the SEC’s court with this filing. It is possible that there will be some back and forth between the applicants and the regulator about these details.
Scott Johnsson, General Partner and General Counsel at Van Buren Capital, quickly responded to the above thread. He highlighted the mentions of risk factors affecting the fund in the amended application, namely regarding illegal transactions and negative environmental impacts of crypto mining.
I mean, you know it’s probably the SEC when they force you to introduce two risk factors for illegal transactions and negative environmental impacts of mining. pic.twitter.com/tu2Sxe0ySf
— Scott Johnsson (@SGJohnsson) October 11, 2023
In particular ARK Invest and 21Shares first archived for a joint spot BTC ETF in 2021. Since then, the SEC has rejected all of its applications time and time again.