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Spot Bitcoin ETF Moves Closer to Approval with Amended Applications

ARK Invest and 21Shares are working closely with regulators to bring a bitcoin ETF investment opportunity to the broader market.

Ark Invest and 21Shares are working with regulators to launch a bitcoin ETF.
Creator: Andrew Harrar. Credit: Bloomberg. Copyright: 2019

WASHINGTON – In a promising development for cryptocurrency enthusiasts and investors, ARK Invest and 21Shares have submitted an amended application for their joint spot Bitcoin exchange-traded fund (ETF). The latest filing, dated October 11, contains additional information about the proposed ETF's operational procedures and asset management, indicating a step forward in the approval process.

Spot Bitcoin ETF Application Amended

This amendment appears to be a direct response to the United States Securities and Exchange Commission's (SEC) inquiries and concerns, according to Eric Balchunas, a senior ETF analyst at Bloomberg. Balchunas suggests that the changes reflect a cooperative effort by ARK Invest to address the SEC's comments and concerns, thereby advancing the application. He states,

"It means ARK got the SEC’s comments and has dealt with them all, and now put [the] ball back in [the] SEC’s court. In my opinion, [it's a] good sign, solid progress."

The modifications to the application are spread throughout the filing, adding five pages to the document. According to Balchunas, none of the changes are novel or insurmountable, indicating that ARK Invest is making an effort to align the application with the SEC's requirements.

Corporations React

One of the significant changes outlined in the amended application pertains to the fund's net asset value (NAV) calculations, which were found to be inconsistent with Generally Accepted Accounting Principles (GAAP), an accounting standard endorsed by the SEC. This adjustment aligns the ETF with the SEC's financial standards, addressing a critical concern.

Furthermore, the filing clarifies that the ETF's assets, managed by Coinbase Custody, are held in "segregated accounts" that are not commingled with corporate or other customer assets. This modification, as noted by Bloomberg ETF analyst James Seyffart, underscores that ARK Invest and other stakeholders are actively engaging with the SEC to address any outstanding issues.

Scott Johnsson, a general partner at Van Buren Capital, highlighted another important addition to the application. The amendment now includes a comment on the potential impact of Bitcoin's use in illegal activities and the environmental consequences of Bitcoin mining. It suggests that if Bitcoin is increasingly associated with illegal purposes or if the environmental impact of mining leads to restrictions, the ETF's value could be negatively affected.

This amendment represents a positive step in the path to regulatory approval for a spot Bitcoin ETF. As the cryptocurrency market continues to evolve, this development demonstrates the commitment of ARK Invest and 21Shares to work closely with regulatory authorities to bring this investment opportunity to the broader market.


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