Cathie Wood’s ARK Invest has amended its Bitcoin Spot ETF filing to include a new Watch Share Agreement, taking cues from a filing made by investment giant BlackRock earlier this month.
The amendment may give ARK a better chance of getting its product approved by the US Securities and Exchange Commission (SEC), which has denied every flavor of the product to date.
A critical change to the ARK
According to the modified ARK 19b-4 filingThe proposal notes that Cboe BZX Exchange — on which the 21 shares of Ark’s ETF will be listed — will enter into a Watch Share Agreement (SSA) with “an operator of a US-based spot trading platform for Bitcoin.”
ARK did not specify which specific exchange it would partner with, but claimed that it represents “a significant portion of bitcoin trading in the US.”
“This Spot BTC SSA, in combination with information made available through (Intermarket Surveillance Group) related to CME Bitcoin Futures, which the exchange believes represents a regulated market of significant volume, should enhance the exchange’s ability to detect and deter stock manipulation,” Ark wrote.
The inability to form an adequate control share agreement related to bitcoin spot trading is what caused Ark’s last ETF application to be rejected in January.
While Ark and other companies – such as Grayscale – have proposed entering into this agreement with CME Bitcoin Futures, the SEC claims that this market is not closely enough connected to discover bitcoin trading.
Ark has upheld its defense of using CME Bitcoin Futures, arguing that other commodity ETFs that use the related CME futures market have been approved as a “regulated market with high volume.” Furthermore, many commodity- and currency-based ETFs had unregulated spot markets, including gold, silver, platinum, palladium, and copper.
BlackRock Deposit
Own BlackRock 19-b4 filing It included the same segment as Ark about its own stock exchange, Nasdaq, entering SSA with the US-based Bitcoin spot exchange.
According to Bloomberg ETF analyst Eric Balchonas, Ark’s filing puts the company in a position to be approved before Blackrock, since it filed first.
This adds another twist to the UK SEC’s decision on the plot in August, if they delay it, it’s a bad sign to approve it unless they delay and then approve BlackRock, which shows nepotism. The grayscale resolution announcement also plays a role in the timing of all this. Grab the popcorn.
– Eric Balchunas June 28, 2023
Balchunas added that BlackRock may have blocked Coinbase from participating in Ark’s SSA, as the investment giant has already partnered with Coinbase for its own product.
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