In this way, ARK Invest led by Cathie Wood filed again for a spot bitcoin ETF, deviating from the latest SEC statement concerning cash creations. This has however led ARK to propose a spot bitcoin ETF that will trade under the ticker symbol ARKB revealing an expense ratio of 0.80% making ARK the first issuer to publicly announce proposed fees in an EFT product.
To manage supply and demand, ETFs usually issue new shares by selling them directly for bitcoins. Following more reports from Bloomberg’s ETF Analyst Eric Balchunas, ARK filed its 3rd amendment on 11th Jan, sticking to in-kind creations and redemption amidst the commission of cash exchange.
SEC’s Division of Trading and Markets recommended companies looking to introduce Bitcoin ETFs must change their applications as an alleged manipulation within in-kind swaps could result in a possibility of fraudulent activity.
While, ARK Invest seems firm to rebel against the guidance, focusing on the benefits of in-kind ETFs like capital gains deferment, lower distributable income, and tax loss selling.
Balchunas tweets on the issue
Balchunas tweeted that some issuers would attempt to convince the SEC to accept an in-kind offer from them because it would be a beneficial opportunity for the investors.
Finally, ARK Investment’s decision to use ‘in-kind’ creations for its Bitcoin ETF even though the SEC prefers ‘cash’ creations indicates that they are aware of the advantages ‘in-kind’ creations offer investors, especially on taxes. This paves the way for alternative approaches towards EFTs and leads to arguments over investor benefits against regulatory issues.
Additionally, revealing the expense ratio promotes a new level of honesty in the nascent Bitcoin market, paving the way for upcoming Bitcoin EFTs. How the Bitcoin ETF regulatory framework evolves, influenced by Bitcoin persistence and SEC posture.
