ARK Investment Addresses SEC Concerns in Revised Bitcoin ETF Proposal

Key Points:

  • ARK Investment revises Bitcoin ETF proposal addressing SEC’s concerns.
  • SEC questions NAV calculations’ alignment with GAAP.
  • Grayscale’s court win boosts the crypto community’s ETF approval hopes.

In a recent development, ARK Investment Management LLC, a prominent American asset management company, has submitted a revised version of its Bitcoin spot ETF (Exchange-Traded Fund) prospectus to the U.S. Securities and Exchange Commission (SEC). This move comes as a response to the regulator’s previous queries and concerns.

ARK Investment Addresses SEC Concerns in Revised Bitcoin ETF Proposal
ARK Investment Addresses SEC Concerns in Revised Bitcoin ETF Proposal

SEC’s Concerns on NAV and ARK’s Response

One of the SEC’s primary issues was the Net Asset Value (NAV) calculations. In its updated document, ARK Investment acknowledged the SEC’s observations, pointing out that its NAV calculation method did not align with the Generally Accepted Accounting Principles (GAAP). The company’s statement elaborated; 

The method of determining the Trust’s bitcoin value using the Index does not adhere to the U.S. GAAP. As such, it isn’t utilized in the Trust’s financial reports. Instead, for the purposes of financial statements, the Trust’s bitcoins are recorded at their fair value, in line with GAAP requirements.

Furthermore, ARK Investment clarified the handling and storing of the Trust’s assets with their Custodian. They emphasized that these assets would not be mixed or co-mingled with customer assets. Instead, the Trust’s assets would be stored in distinct, segregated accounts on the Bitcoin blockchain, commonly called “wallets.”

Eric Balchunas, the Senior ETF Analyst at Bloomberg, shared his insights on the social media platform X (previously known as Twitter). He interpreted the revisions in ARK Investment’s updated Bitcoin ETF proposal as a positive step forward, indicating “solid progress.” 

However, he also cautioned that further discussions with the SEC might occur regarding some intricate details. Balchunas stated; 

While it’s not certain that an approval is on the horizon, the ongoing dialogue between ETF issuers and the SEC is a promising sign.

Crypto Community’s Growing Anticipation for ETF Approval

The crypto community’s anticipation for a Bitcoin spot ETF approval has grown, especially after a recent court ruling favored Grayscale over the SEC’s decision to reject their ETF application. This ruling has spurred other companies, including Grayscale, to intensify their appeals to the regulators for swift ETF approvals.

In conclusion, while the path to a Bitcoin spot ETF approval remains filled with regulatory hurdles, ARK Investment’s proactive approach in addressing the SEC’s concerns and the positive court ruling for Grayscale indicate a shifting tide. The crypto community remains hopeful, awaiting the regulator’s green light.

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