Spot Bitcoin ETFs ‘final seal of approval’ for Institutions, Cathie Wood says

Cathie Wood – upload.wikimedia.org

Ark Invest CEO Cathie Wood has said that the Securities and Exchange Commission (SEC) approving spot Bitcoin ETFs could act as the “final seal of approval” for institutions interested in entering the cryptocurrency community.

Ark Invest, collaborating with 21Shares, has submitted a live filling to the agency for this type of product. The SEC has until January 10 to decide on the proposed Ark 21Shares Bitcoin ETF (ARKB).

The SEC permitted Bitcoin futures ETFs to begin trading in October 2021. During a webinar on Wednesday, Wood said these approvals were “interesting” due to the counterparty risk associated with those funds compared to a spot product secured by bitcoin held in cold storage. Many entities aiming to introduce bitcoin ETFs have designated Coinbase as the custodian for the funds’ BTC.

In August, Grayscale Investments claimed a legal win against the SEC. The court ruled that the SEC’s decision to reject converting the Grayscale Bitcoin ETF (GBTC) into an ETF while permitting futures-based funds was “unreasonable and inconsistent.”

“I think it’s all coming together, and if you look at our appreciation expectations for bitcoin, the biggest part of the appreciation during the next five to 10 years we think will come from institutional,” Wood said.

Wood voiced optimism that the price of a single bitcoin could reach $1 million or higher in the distant future.

Bloomberg Intelligence analysts James Seyffart and Eric Balchunas estimate a 90 percent chance of approval for a spot bitcoin ETF by January 10.

The approval would represent a change in the stance of a securities regulator that has turned down many spot bitcoin ETF proposals over the last decade. Despite this, 21Shares President Ophelia Snyder said on Wednesday that there had been “pattern breaks” in recent months as issuers seek approval for these funds.

“If everything goes the way it always goes, you’re going to end up with the same result,” she said on the webinar alongside Wood. “I think the fact we’re seeing very material differences in this round of the spot process versus prior rounds is a very promising indication of a different outcome.”

The alterations involve issuers consistently updating their Bitcoin ETF submissions. Observers in the industry suggest that this action might indicate ongoing discussions with the SEC. For instance, both BlackRock and Bitwise updated their S-1 forms on Monday.

BlackRock’s amendment included information about the firm raising $100,000 of seed capital for the fund. This type of capital helps create units that enable shares to be offered and traded on the open market.

“[It’s] meaningful because it shows they are doing everything needed to launch,” Seyffart said. “But I don’t think it means much more than that.”

Ark and 21Shares submitted their most recent Bitcoin ETF filing in April, a couple of months before BlackRock’s involvement. BlackRock’s entry prompted Fidelity, Invesco and various others to renew their own Bitcoin ETF initiatives.

“We do think while we’re first in line that a number of the firms will be approved at the same time,” Wood said. “Depending on exactly how they filed, it could be that more than a half dozen are approved in the first go.”

Wood sells $33 million Coinbase shares

On Monday, Bitcoin crossed $40,000 for the first time in 18 months and reached about $44,000 by Wednesday morning.

Following this surge, Wood’s Ark Invest sold approximately 237,572 shares of Coinbase Global, a renowned crypto trading platform, on Tuesday. The sale amounted to roughly $33.3 million.

Ark’s flagship Innovation ETF accounted for most of the sale, reducing its Coinbase holding by 201,711 shares. This holding recently became the fund’s biggest position.

Despite the reduction, Ark Innovation’s Coinbase holding still stands as its largest, making up 11.64 percent of the fund and valued at $960 million.

Coinbase shares have surged about fourfold this year, nearly doubling in just the last month. The stock ended Tuesday at $140.20.

Wood revealed that when a particular holding grows significantly compared to others, Ark will sell some of the larger holdings and invest that into other companies.

“We will always recycle that way,” she said.