Bitcoin ETF: ARK Invest vs. BlackRock

The race for a Bitcoin exchange-traded fund (ETF) in the United States is heating up, with ARK Invest making a strategic move to match BlackRock recent filing with the Securities and Exchange Commission (SEC). 

ARK, led by prominent investor Cathie Wood, amended its SEC filing to include an oversight sharing agreement, a crucial aspect that BlackRock had already included in its application.

ARK investment versus BlackRock: who will have primacy over the Bitcoin ETF?

ARK had submitted its proposal to the SEC back in April, almost two months before BlackRock’s application. 

By adding the surveillance sharing agreement, known as the “Spot BTC SSA,” ARK intends to strengthen its chances of crossing the finish line and becoming the first to launch an ETF on Bitcoin. 

The agreement involves ARK, the Chicago Board Options Exchange (CBOE), BZX Exchange and a cryptocurrency trading platform, although the specific platform has not been disclosed.

A surveillance sharing agreement is a mechanism for sharing information with regulators to prevent potential market manipulation.

This includes sharing details on market trading activity, clearing activity, and customer identification. 

The SEC stressed that applicants must demonstrate their ability to protect investors from manipulative practices, a concern that has been raised in the cryptocurrency sector.

Notably, previous rejected or pending applications did not contain surveillance sharing agreements, which drew attention when BlackRock included one in its ETF filing. 

BlackRock’s filing, which came from a $9 trillion asset manager, generated considerable buzz and speculation in the market, leading some to question whether the industry views the inclusion of the agreement favorably because of its size or the increased protection offered to investors.

ARK’s previous attempts to launch a Bitcoin ETF

ARK’s previous attempt to launch a spot ETF on Bitcoin, made in partnership with global cryptocurrency ETF provider 21Shares in June 2021, was rejected by the SEC earlier this year. 

The regulator cited failure to demonstrate effective measures to combat market manipulation by cryptocurrency traders as the reason for the rejection.

However, the SEC recently approved the first leveraged Bitcoin futures ETF, BITX, marking a turning point for the cryptocurrency industry. 

BITX began trading the day after approval, recording a successful launch with $5.5 million in trades. 

Although the approval of a leveraged Bitcoin futures ETF is a positive development, market participants anxiously await the arrival of a Bitcoin spot ETF, which would provide direct exposure to Bitcoin price movements.

The inclusion of oversight sharing agreements in recent ETF filings indicates a growing recognition of the importance of investor protection and regulatory oversight in the cryptocurrency space. 

The SEC has been clear in expecting applicants to demonstrate that they have robust measures in place against market manipulation. 

By amending its filing to include an oversight sharing agreement, ARK Invest intends to address these concerns and position itself as a strong contender for approval of an ETF on Bitcoin.

As the race for an ETF on Bitcoin continues, industry participants and investors eagerly await the SEC’s decision on the pending applications. 

The successful launch of an ETF on Bitcoin would likely have a significant impact on the adoption of cryptocurrencies and further cement their role in traditional financial markets.

The importance of this financial development

The approval of an ETF on Bitcoin in the United States would mark a significant milestone for the cryptocurrency industry. 

It would provide traditional investors with a regulated and affordable vehicle to gain exposure to Bitcoin, potentially attracting billions of dollars into the market. 

In addition, an ETF on Bitcoin would offer greater liquidity and price transparency, making it easier for investors to buy and sell Bitcoin without directly owning the underlying asset.

Although the SEC has been cautious about approving ETFs on Bitcoin because of fears of market manipulation, the inclusion of oversight sharing agreements in the latest documents suggests progress in addressing these concerns. 

By sharing information with regulators, such as trading activity and client identification, applicants aim to provide transparency and protect investors from fraudulent practices.

The entry of established financial institutions such as BlackRock and ARK Invest into the Bitcoin ETF race further validates the growing acceptance of cryptocurrencies in the mainstream financial sector. 

These companies bring significant expertise and resources that could contribute to the development of a safe and regulated ecosystem for Bitcoin investments.

Cathie Wood’s ARK Invest, known for its focus on disruptive technologies, has been at the forefront of investing in innovative sectors, including cryptocurrencies. Wood said she is convinced of the long-term potential of Bitcoin and other digital assets. 

If ARK’s amended filing, with the inclusion of an oversight sharing agreement, helps gain approval for an ETF on Bitcoin, it is likely to attract considerable attention and investor interest.

Conclusions

In conclusion, the race for ETFs on Bitcoin is heating up as companies such as ARK Invest and BlackRock make strategic moves to gain SEC approval. 

The inclusion of surveillance sharing agreements in filings indicates a commitment to address market manipulation issues and protect investors. 

Approval of an ETF on Bitcoin in the United States would have significant implications for the cryptocurrency market, attracting institutional investors and fostering mainstream adoption. 

As the industry evolves, regulators and market participants will continue to work together to create a safe and regulated environment for cryptocurrency investment.