Ark Invest, a leading asset management firm, has been making an extra effort towards enhancing its crypto strategy. In the recent development, the firm announced that it would lend out its name to an exchange-traded fund (ETF) that tracks Bitcoin futures.
A Bitcoin future has a few differences from the Bitcoin cryptocurrency. A Bitcoin futures contract offers indirect exposure to cryptocurrencies, which is an ideal option for those who do not want to hold the actual cryptocurrency.
ARK Invest wants a US-Regulated Bitcoin ETF
A publication by Bloomberg revealed that Ark Invest is joining the list of institutions applying for a crypto ETF with the Securities and Exchange Commission (SEC). The ETF is dubbed the Ark21 Shares Bitcoin Futures Strategy ETF under the ticker symbol ARKA.
The chances of crypto ETF futures being approved are higher than those of a crypto ETF being approved, according to the sentiments shared a few weeks back by the SEC Chair, Gary Gensler.
Bitcoin futures markets are highly volatile, but they offer a higher regulatory clarity. Like all the other commodities and derivatives, futures are regulated by the Commodity Futures Trading Commission (CFTC). The latest filing by Ark Invest states that the fund will invest in Bitcoin Futures ETFs that are fully regulated in the US.
In the announcement, Ark Invest stated that the fund is an “actively managed exchange-traded fund (ETF) that seeks to achieve its investment objective by investing, under normal circumstances, in exchange-traded bitcoin futures contracts that are cash-settled in US dollars and are traded on, or subject to the rules of, commodity exchanges registered with the Commodity Futures Trading Commission (CFTC).”
Demand for ETFs is high
The SEC has been reluctant to approve direct cryptocurrency ETFs. The Grayscale Bitcoin Investment Trust (GBTC) is the closest thing to a crypto ETF. However, it does not function as an exchange-traded fund, but it offers indirect exposure to Bitcoin by enabling investors to buy the trust shares made of a large amount of Bitcoin.
ETFs can give an indirect exposure to Bitcoin either through an investment in a trust, a private offering or an open-end or pooled investment vehicle that invests in Bitcoin. The fund can also offer exposure to firms with significant investments in Bitcoin or are actively involved in the crypto sector.
The Ark Invest ETF invests in Coinbase shares, Tesla, which has 42,000 Bitcoin holdings and Square, a payments processing firm founded by Jack Dorsey with over 8000 Bitcoins in holding. These firms are actively involved in the cryptocurrency sector.
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