ARK Invest, the New York-based investment house led by Cathie Wood, is now eyeing an exchange-traded fund (ETF) tracking Bitcoin futures.
According to an SEC filing submitted by Alpha Architect ETF Trust on Wednesday, the ARK 21Shares Bitcoin Futures Strategy ETF plans to invest in Bitcoin futures contracts that are traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC).
While ARK Invest has officially lent its name to the new product, which also has a ticker ARKA, the firm “does not make investment decisions, provide investment advice, or otherwise act in the capacity of an investment adviser to the fund.”
Instead, ARK has agreed to provide marketing support to the fund’s sub-adviser, 21Shares US, an affiliate of Switzerland-based 21Shares AG.
Per the filing, ARK is entitled to a fee from the sub-adviser for its services.
An ETF is a publicly traded investment vehicle that offers investors exposure to underlying assets by tracking their value. A Bitcoin ETF would thus track the price of Bitcoin, offering investors exposure to the world’s leading cryptocurrency without the need to purchase and store the actual asset.
Earlier this year, ARK Invest filed a direct application for a Bitcoin ETF tied to physical Bitcoin, which, if approved, would trade on Cboe's BZX Exchange. The Ark 21Shares ETF has a March 30, 2022 deadline for the SEC to either approve or reject it, or extend the review period.
The U.S. Securities and Exchange Commission (SEC) has so far blocked all attempts to launch a Bitcoin ETF backed by the actual underlying asset, citing the risk of market manipulation and Bitcoin's volatility.
However, Gary Gensler, the agency’s chair, appears to be in favor of a Bitcoin futures ETF–an investment vehicle that would track the price of regulated Bitcoin futures contracts.
All eyes on Bitcoin futures
Futures are an agreement between parties to purchase an asset in the future at a price determined in the present. In the U.S., regulated Bitcoin futures contracts are currently available on the Chicago Mercantile Exchange (CME).
According to the latest report from Arcane Research, CME's share of the global open interest in the Bitcoin futures reached 17% in October–the highest level recorded since February 2021.
A slew of companies has rushed to apply for Bitcoin futures ETFs in recent weeks, with rumors pointing to October 18 as a date when the SEC could possibly approve such an application.
If this turns out to be the case, and the SEC indeed gives a green light to a Bitcoin futures ETF, this could mean more institutional adoption for the world’s largest cryptocurrency, and–possibly–an uptick in prices.
However, as recently argued by Dan Morehead, the CEO of crypto-focused investment company Pantera Capital, history suggests that such approval could instead create a bearish impulse for the leading crypto.