ARK Invest's Updated Bitcoin ETF Proposal in Response to SEC's Feedback

ARK Invest updates its Bitcoin ETF proposal in response to SEC feedback.
Coinbase’s custodial practices and other critical areas addressed in the revised application.

In the ever-evolving landscape of cryptocurrency, ARK Invest has taken proactive measures to stay ahead of the curve. On October 11, the company submitted an amended proposal for a spot Bitcoin ETF to the U.S. Securities and Exchange Commission (SEC). This move demonstrates ARK’s commitment to refining its proposal based on feedback received from the regulatory body.

One noteworthy change in this updated application is the revelation of Coinbase’s custodial practices. According to Bloomberg ETF analyst Eric Balchunas, the assets tied to the ETF are stored in individual addresses on the Bitcoin blockchain, ensuring they remain distinct from Coinbase’s and other clients’ assets. This transparency is a response to growing concerns within the crypto community regarding the security and segregation of assets.

ARK Invest’s revised application also delves into various valuation techniques used by the fund, which may deviate from the U.S. generally accepted accounting principles (GAAP). Furthermore, the filing addresses critical issues such as illicit transactions within the cryptocurrency space. It suggests that an increase in unlawful activities or even the perception thereof could negatively impact the ETF’s value, highlighting the volatile nature of the crypto market.

Proactive Adaptations to Regulator Feedback

Scott Johnsson, of Van Buren Capital, points out another crucial aspect of the application, focusing on Bitcoin mining and its environmental implications. The document acknowledges the potential adverse effects of environmental concerns, regulatory changes, fluctuating energy prices, and the possible shutdown of mining entities on Bitcoin’s value.

This strategic update by ARK Invest appears to be a response to recent developments within the SEC. In late September, the regulatory body sought feedback on proposals from several other entities, even though ARK Invest wasn’t explicitly mentioned at that time. These modifications align with the evolving concerns of the SEC, as they continue to navigate the cryptocurrency market’s regulatory landscape.

It’s important to note that while the SEC has not yet approved a spot Bitcoin ETF, they did give the green light to Bitcoin futures ETFs in 2021 and more recently to Ethereum futures ETFs, indicating a growing acceptance of cryptocurrency investment products. The crypto world eagerly anticipates the SEC’s forthcoming decisions and their impact on the market.