Ark Invest Bitcoin ETF will ‘not provide investors with direct exposure to spot bitcoin’

In a significant development for the cryptocurrency exchange-traded fund (ETF) market, ARK 21Shares Bitcoin ETF has amended its strategy, transitioning from providing direct exposure to Bitcoin to offering investors indirect access. This pivot, detailed in the latest S-1 amendment, marks a critical juncture in the evolution of crypto ETFs.

Per the original October prospectus, the Trust aimed to grant investors direct exposure to Bitcoin, facilitating entry into the Bitcoin market through traditional brokerage accounts without the complexities of direct Bitcoin handling or acquisition. However, the recent amendment delineates a shift to indirect Bitcoin exposure. This change suggests a strategic realignment in how the Trust positions itself within the increasingly scrutinized realm of cryptocurrency investments.

Editor’s Note: The amendment has only been released, and CryptoSlate is actively reviewing the 70,000+ word document. The current report is based on a like-for-like review of the document’s language and may not be fully representative of the amendment as a whole. 

21Shares ETF vs. Grayscale Bitcoin Trust.

The shift in ARK 21Shares Bitcoin ETF’s strategy to provide indirect exposure to spot Bitcoin appears to bring it closer to products like the Grayscale Bitcoin Trust (GBTC). However, there are still distinct differences between the two:

Structure and Operation:

ARK 21Shares Bitcoin ETF: As an ETF, it is designed to track an index (in this case, the CME CF Bitcoin Reference Rate – New York Variant) and offers indirect exposure to Bitcoin. It operates under ETF regulations, providing a structure that is typically more liquid and trades on an exchange similar to stocks.

Grayscale Bitcoin Trust (GBTC): GBTC is a trust that directly holds Bitcoin. GBTC investors own shares representing a portion of the bitcoin held by the Trust. It’s not an ETF but operates more like a closed-end fund, and its shares can be traded at a significant premium or discount to the underlying bitcoin value.

Market Exposure:

ARK 21Shares Bitcoin ETF: By offering indirect exposure, this ETF may utilize various financial instruments or derivatives to track Bitcoin’s price rather than holding Bitcoin directly. However, the filing does state that the Trust will hold Bitcoin according to the current filing.

“In seeking to achieve its investment objective, the Trust will hold…