- ARK Invest submits an updated application to the SEC, addressing previous criticisms.
- The modified proposal touches on Coinbase’s custodial practices and other significant concerns raised by the SEC.
ARK Invest, in a bid to stay ahead of the curve, revamped its proposal for a spot Bitcoin ETF. The amendment, presented to the U.S. Securities and Exchange Commission (SEC) on October 11, showcases ARK’s intent to adapt and refine their proposal based on the feedback received.
Bloomberg ETF analyst Eric Balchunas pointed out on X (previously known as Twitter) that the updated application sheds light on Coinbase’s custodial practices. The amendment elaborates that the assets linked to the ETF are stored in individual addresses on the Bitcoin blockchain, ensuring they aren’t mixed with the company’s or other clients’ assets. This comes as a response to a tweet by Collin Brown, which read,
🚀 #ARK doesn't miss a beat! Their spot #Bitcoin ETF update shows they're taking the SEC's feedback seriously. With the #Grayscale ETF decision on October 13th, the crypto world is on the edge of its seat. Let's keep our fingers crossed for exciting news! 🤞📅 #BitcoinETF https://t.co/HTy0aDXt2D pic.twitter.com/ddFSriNcIt
— Collin Brown (@CollinBrownXRP) October 12, 2023
Addressing the SEC’s Concerns
ARK Invest’s updated application also reflects upon certain valuation techniques the fund employs, which reportedly deviate from the U.S. generally accepted accounting principles (GAAP). The filing further tackles critical areas like illicit transactions, suggesting that an increase in unlawful activities related to cryptocurrency or even the perception thereof might lead to the ETF’s value plummeting.
Scott Johnsson, of Van Buren Capital, also shed light on the application’s section about Bitcoin mining and its environmental implications. The document acknowledges potential adverse effects on Bitcoin’s value due to environmental issues from mining, regulatory changes, fluctuating energy prices, and the possible shutdowns of mining entities.
Proactive Steps in a Changing Landscape
It appears that ARK’s update might be a strategic response to the SEC’s recent moves. On September 29, the SEC asked for feedback on proposals from BlackRock (iShares), Valkyrie, and Invesco Galaxy, while also seeking comprehensive remarks on BitWise’s proposal. Although ARK Invest wasn’t explicitly addressed then, their recent modifications seem to align with the regulator’s evolving concerns.
It’s crucial to note that, as of now, the SEC hasn’t given the green light to a spot Bitcoin ETF, but they did approve Bitcoin futures ETFs in 2021 and Ethereum futures ETFs more recently.