ARK Invest and 21Shares Revamp Bitcoin ETF Application in Response to SEC Concerns
Summary:
ARK Invest and 21Shares have updated their joint Bitcoin exchange-traded fund (ETF) application with additional details responding to concerns from the Securities and Exchange Commission (SEC). The changes, seen as progress towards approval, include the clarification of asset custody practices and a stated non-compliance of net asset value (NAV) calculations with Generally Accepted Accounting Principles (GAAP). The amendments also highlight potential risks to the ETF's value from unlawful uses of Bitcoin and potential restrictions due to environmental concerns related to Bitcoin mining.
An update to the joint Bitcoin (BTC) exchange-traded fund (ETF) application by ARK Invest and 21Shares may suggest progress and a path towards approval. The updated application, filed on October 11 to the Securities and Exchange Commission, provides more details about the proposed Bitcoin ETF, outlining practices for asset custody and determination of asset values. Bloomberg's senior ETF analyst, Eric Balchunas, inferred the adjustments are a response to SEC's concerns previously highlighted. Balchunas postulated that the application is now ready for SEC's review and hailed this as a positive step forward.
The new filing, enriched with additional contents, has made the document five pages longer. Among the updates are ARK's disclosure that the fund's net asset value (NAV) computations do not comply with the Securities and Exchange Commission's usual accounting standard - the Generally Accepted Accounting Principles (GAAP). The revised filing also reveals that the ETF's assets, kept by Coinbase Custody, are maintained in separate accounts, preventing them from being mixed with corporate or any customer assets.
James Seyffart, another Bloomberg ETF analyst, spotted this detail and believed this indicates ARK is actively communicating with the SEC to address the regulator's concerns. Scott Johnsson from Van Buren Capital picked out another new entry in the revised filing - the possibility of the ETF's value falling if Bitcoin was increasingly used unlawfully or if its mining's environmental impact resulted in restrictions. Johnsson's take on the amendments made by ARK was that it didn't seem like the SEC had set up unnecessary hurdles.
Published At
10/12/2023 5:59:58 AM
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