Will the Ark Bitcoin ETF Be the First?
Amanda Heckman|July 3, 2021
What will it take to get a Bitcoin ETF approved in the U.S.?
That’s the question on investors’ minds this week with word of the latest attempt to break crypto wide open.
But will she be enough to convince the Securities and Exchange Commission that it’s past time to approve the ETF investors are clamoring for?
The Biggest in the Bunch
At last count, there were more than a dozen Bitcoin ETF applications awaiting approval by the SEC. Some big-name funds are trying to be the first, including Fidelity, Grayscale Investments, WisdomTree, VanEck and New York Digital Investment Group.
But Cathie Wood is the biggest name of the bunch.
Her Ark Invest has taken in $37 billion in new money since the beginning of 2020, the third-highest inflow among money managers, behind only Vanguard Group and BlackRock’s iShares (both have hundreds of funds).
The firm’s flagship ETF, Ark Innovation (ARKK), has grown more than tenfold within a year and was the top-performing ETF last year. It now has $22 billion in assets.
A longtime fan of Bitcoin, Wood has partnered with an experienced European provider to create a Bitcoin ETF. 21Shares has close to $2 billion in assets across more than a dozen exchange-traded products (ETPs) in the European markets. It offers several products focused on Bitcoin, Ethereum, Ripple, Polkadot and Cardano.
The newly proposed Ark 21Shares Bitcoin ETF would track the performance of the world’s largest cryptocurrency by measuring it against the S&P Bitcoin Index. It would not buy or sell Bitcoin.
Notably, Ark would not hold the fund’s assets – 21Shares would. Ark would market the product and bring investors in. That difference – using an issuer already versed in crypto ETPs – could be a boon during the approval process.
Bad News Is Good News?
Now, some worry that the crypto market’s recent drop will be a roadblock for an ETF.
But Wood recently said she believes the downtrend has improved the chances of approval.
Just look at our neighbors to the north. Canada’s Purpose Bitcoin ETF – the first Bitcoin ETF brought to market – is seeing massive inflows in light of Bitcoin’s price dip. And even more importantly, the ETF’s price moved in lockstep with Bitcoin’s price. The ETF remained stable – it didn’t trade at a huge discount or premium to Bitcoin.
And here in the U.S., another good sign is that big institutional investors are piling in now that Bitcoin has cooled its heels. As Andy told us on Tuesday, “The so-called whales who hold 1,000 or more Bitcoin now hold a total of 7.9 million tokens… They know that the future looks very different from today.”
Those large-scale, long-term purchases will help bring more stability to the markets.
There’s clearly strong demand from investors for exposure to the price of Bitcoin. And an SEC-approved Bitcoin ETF would usher an even larger wave of investments into the crypto industry.
And it would open this transformational asset class to ALL investors. After all, with an ETF…
- There’s no need to go through the process of storing crypto safely yourself.
- Transactions are faster, significantly more secure and less prone to outages than they are on crypto exchanges.
- There are much clearer tax implications and guidance than there are for digital assets.
- It’s much easier to buy and sell, as stock exchanges are more liquid than crypto exchanges.
So while the SEC hems and haws over protecting investors… it’s keeping many of them from investing in crypto in one of the safest forms possible.
The regulators can’t continue to ignore the growing momentum. Because while Cathie Wood may be the biggest investor to jump on board… she won’t be the last. And the louder the calls get, the more hapless the SEC will look… and the more investors will lose.
Amanda Heckman|Editorial Director
Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.