Ark Invest Edges Closer to SEC Approval with Updated Bitcoin ETF Filing

On Oct 12, 2023

Cathie Wood’s Ark Invest, the investment management firm with a knack for identifying disruptive technology trends, has recently updated its Spot Bitcoin ETF filing with the U.S. Securities and Exchange Commission (SEC). This move comes weeks after the SEC engaged issuers with questions and comments to understand and potentially streamline their filings. The latest update sheds light on a proactive engagement between Ark Invest and the SEC, signaling potential progress towards a future approval.

ARK has just filed an updated version of its spot bitcoin ETF prospectus. The SEC emailed issuers a few wks ago with comments/qs about their S-1 that they wanted addressed so is very poss ARK has answered all that in this filing. We looking thru it now.. pic.twitter.com/AlwTt82WU0
— Eric Balchunas (@EricBalchunas) October 11, 2023

One of the critical updates revolves around the Net Asset Value (NAV) calculations. Previously, there was much ambiguity surrounding how Ark Invest planned to calculate NAV for the Bitcoin ETF. The updated filing clearly states that the NAV calculations will not be by Generally Accepted Accounting Principles (GAAP). This explicit acknowledgment shows Ark Invest’s commitment to addressing even the most technical queries from the SEC, ultimately indicating positive movement in the regulatory review process.

In a significant step towards asset security, Ark Invest has detailed that the Bitcoin assets held by the Trust’s Custodian will be stored in segregated accounts on the Bitcoin blockchain. These “wallets” will not be commingled with corporate or other customer assets. Such a setup is paramount for ensuring the highest level of asset security, transparency, and accountability. The move is seen as a direct response to the SEC’s concern about the safety of investors’ assets.

Although the updated filing has five extra pages, the noteworthy changes are sprinkled throughout the document, as pointed out by Eric Balchunas, a Senior ETF analyst at Bloomberg. James Seyffart, another ETF analyst, also remarked that the meticulous editing suggests an ongoing dialogue with the SEC to clear up all regulatory roadblocks. Both analysts agree that although approval isn’t imminent, the back-and-forths signify a very encouraging sign.

Balchunas also hints at the likelihood of further delays, suggesting more back and forths on “small but important details” before a final green light from the SEC. The regulator recently gave a “notice of the designation of a longer period for commission action,” indicating more time is needed to make a final decision. Although Ark Invest initially expected a decision by September 26, the regulatory timeline appears elastic in a promising direction.

Ark Invest’s recent filing updates bring the investment firm one step closer to a future SEC approval for its Spot Bitcoin ETF. The firm’s proactive amendments reflect a meticulous and transparent approach, responding adequately to the SEC’s concerns. While the road to approval may still have some curves, the journey seems promising, setting a precedent for other issuers waiting in the wings.