Cathie Wood’s Ark Investment Gets into Canadian Bitcoin ETFs As US SEC Delays Applications

Cathie Wood’s Ark Investment Management LLC updated its prospects. They can now invest in Canadian Bitcoin ETFs as the investment management company seeks new ways to bet on digital assets.

A new supplement filing with the US Securities and Exchange Commission (SEC) indicates that Cathie Wood’s ARK investment management company has given itself the green light to buy Canadian Bitcoin Exchange-Traded Fund (ETFs).  The firm’s investment product (ARK Next Generation Internet ETF) has updated its prospectus to enable the fund to invest in Bitcoin ETFs based in Canada.

In the past, the firm’s fund (ARK Next Generation Internet ETF) could only get exposure to Bitcoin investment through a grantor trust such as the Grayscale Bitcoin Trust.

The move by Ark Investment Management firm comes amid several delays and rejections for similar products in the US by the market regulator (the US SEC), which likely prompted the firm to seek alternatives abroad.

Since Ark Investment Management filed the supplement with the SEC on Friday, September 10; As a result, its fund (the US$5.7 billion ARK Next Generation Internet ETF) now has another option to get indirect exposure to Bitcoin investment.

Besides the Grayscale Bitcoin Trust (GBTC), the fund now can invest in other pooled investment vehicles such as ETFs based in Canada.

The ARK Next Generation Internet ETF already has investment to Bitcoin exposure worth around 5.5% of the fund invested in the GBTC.

Although the Grayscale Bitcoin Trust is considered one of the easiest ways for investors to access crypto assets in the US via a fund, its structure makes it inefficient. Its value frequently detaches from that which Bitcoin holds.

Through the recent supplement filed, ARK may be seeking greater Bitcoin exposure through fewer costs, avenues with greater liquidity, and without having to endure GBTC's premiums.

Bitcoin ETF approvals delay

The move by Ark Investment Management comes amid a long waitlist piling of at least 18 applications for Bitcoin-based Exchange Traded Fund (ETFs) filed with the US SEC.

Grayscale itself has been waiting for regulatory approval to convert its popular trust GBTC into an ETF. Other firms that have filed for listing a Bitcoin ETF in the U.S. include Fidelity, Global X, SkyBridge Capital, VanEck, Valkyrie, NYDIG, and others.

However, the Securities and Exchange Commission has yet to approve any physical Bitcoin ETF in the US, and such approval may not happen anytime soon.

Recently SEC chairman Gary Gensler signalled that he would consider a futures-based Bitcoin ETF under strict rules. Following Gensler’s remarks, several companies filed for futures-based Bitcoin ETFs with the SEC. 

If even Gensler seems more comfortable with futures-based Bitcoin ETFs than physical ones, they are likely still far off to be approved.

This is due to SEC concerns. Besides the worry of fraud and volatility within the crypto landscape, the SEC is also concerned with how the demand for physical Bitcoin ETFs would impact the overall market.

Image source: Shutterstock