On Monday, Cathie Wood’s ARK Invest submitted an updated filing for its Bitcoin ETF, disregarding the recent SEC guidance that says ETF proposals should transition to cash creations instead of in-kind creations.
If given the green light, the ARK 21Shares Bitcoin ETF will be listed on the Chicago Board Options Exchange’s BZX Exchange with the ticker symbol ARKB, as revealed in the revised filing.
This recent update marks the third amendment by ARK and European digital asset manager 21Shares since their April 2023 filing. ARK had previously modified its form S-1 registration statement in October, seen by experts as a positive indication of advancement.
The Ark 21Shares Bitcoin ETF would have a management fee of 80 basis points, according to this recent filing. If someone invests $100, they will be charged 80 cents. The initial placeholder capacity for the ETF’s application listed 70 basis points.
While higher than the average of 0.54 percent across U.S.-listed ETFs, the 80 basis points fee is lower than the 95 basis point fee of the $1.4 billion ProShares Bitcoin Strategy ETF (BITO), the largest Bitcoin futures-based fund.
With this filing, Ark and 21Shares initiated what industry experts believe will lead to swift competition in reducing fees. Major asset-management giants like BlackRock Inc., Invesco Ltd. and Fidelity Investments, recognized for their cost-effective offerings, have also submitted ETF applications. However, none of them have specified management fees in their applications.
“If I’m being honest, I thought they’d be a little lower than this, closer to 50 basis points,” said Bloomberg Intelligence ETF analyst James Seyffart. “Also the fact that Ark and 21Shares have updated their filing from a 70 basis point fee to 80 basis points might mean that running these products is going to cost even more than some sponsors and issuers thought it would.”
Another Bloomberg ETF analyst, Eric Balchunas, explained that the recent filing contains several updates, including various risk disclosures aimed at meeting corporate finance regulations.
“One interesting thing is they are sticking to in-kind creations redemptions — albeit in a hybrid model — to minimize tax and spread issues,” Balchunas noted. “Semi-shocker to be honest, but in a good way,” he said.
Seyffart said the recent filing indicates progress in discussions with the SEC. Not all firms applying for spot Bitcoin ETFs have made amendments. Seyffart’s data show that as of mid-November, among the 12 filers, Franklin Templeton and Global X had not revised their S-1 filings.
The SEC turned down ARK’s initial request on March 3, 2022, citing non-compliance with its rules for listing financial products.
ARK’s second application was filed on May 25, 2022, but it was also rejected by the SEC on January 26.
Even after being rejected twice, the investment companies reapplied for SEC approval of a Bitcoin ETF on April 25.
The SEC endorses Bitcoin Futures ETFs but has consistently turned down applications for Spot Bitcoin ETFs. It cites safeguarding investors and the public interest as the reason, especially concerning potential fraud in the cryptocurrency market.
In September, the SEC postponed its decision on ARK’s application. The new deadline for the decision is scheduled for January 11, 2024.
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