Skip to main content

The SEC is set to approve or reject the listing of Ark Investment Management’s spot-backed Bitcoin ETF in the US on Wednesday. The commission’s decision will likely flow downstream to the 13 other asset managers vying to launch similar funds and carry huge implications for cryptocurrency markets. The seeding of such funds has already begun and the SEC has been uncharacteristically responsive to potential ETF sponsors that have sought comments and made numerous amendments to regulatory filings with the commission. Further, a number of high profile authorized participants have been lined up to take part in the operations of any new spot-backed Bitcoin funds.

The immediate market reaction to a launch of these ETFs will be a bellwether of investor interest in crypto assets and likely define the path forward for Bitcoin’s price – which just this week hit a 22-month high. Inflows are expected to be bolstered by pent-up demand from RIAs and institutions that have not yet felt comfortable about allocating funds to Bitcoin and other digital assets, given the uncertain regulatory environment. The initial fee structures disclosed by several asset managers behind the potential ETFs imply billions of Dollars in assets could flow into the funds within months.

Related ETF & Assets: ProShares Bitcoin Strategy ETF (BITO), Bitcoin (BTC-USD)

A yearlong hype cycle swirling around potential Bitcoin ETFs is finally reaching terminal velocity as tomorrow marks the final decision date for Ark Investment Management’s application, in partnership with 21Shares. Though Wednesday is only the final decision deadline for ARK’s application, a potential SEC approval could be handed down to all outstanding applicants on the same date to avoid giving any asset manager a specific advantage over others. The unit price of Bitcoin (BTC) is moving in tandem with optimistic expectations for these funds, touching $47,000 yesterday for the first time in 22 months.

A jump in prices to start the new year may have been influenced by seeding activity that is now underway for at least some of the asset managers hoping to launch BTC-backed funds in the coming days. In recent regulatory filings, VanEck and Bitwise said they would be seeding their ETFs with $72.5 million and $500,000 of BTC, respectively. Additionally, BlackRock reportedly seeded its fund with $10 million earlier this month. Seeding relates to raising funds, typically provided by a bank or broker dealer, to purchase creation units that can back the ETF’s initial shares, which can be traded upon the launch date.

Recapping Some Recent Developments

The Securities and Exchange Commission (SEC) has been punting any definitive decisions on new Bitcoin-backed funds for several months after previously issuing denials for well over half a decade, but this go-round has been very different in character than previous episodes. Previously, regulators tended to be completely unresponsive to asset managers seeking to launch spot BTC funds, but recent S-1/S-3 registration and 19b-4 rule change filings from 14 separate asset managers hoping to sponsor the US’s first spot Bitcoin ETFs have now received dozens of amendments and revisions based on SEC comments, as well as direct meetings with commission officials. In addition to Ark, asset management giants including BlackRock, Invesco, Franklin Templeton, and Fidelity have all joined into the pack of BTC fund hopefuls. Several potential sponsors have…

To read the complete Intelligence Briefing, current All-Access clients, SIGN IN

All-Access clients receive the full-spectrum of MRP’s research, including daily investment insights and unlimited use of our online research archive. For a free trial of MRP’s All-Access membership, or to save 50% on your first year by signing up now, CLICK HERE