As the anticipation of the approval of a spot Bitcoin ETF finally comes to a head, the Ark 21Shares Bitcoin Trust has made 16 significant clarifications and additions to its S1 filing across several areas, ranging from operational processes to financial responsibilities and regulatory aspects, providing a more explicit, more detailed framework for the ETF’s functioning.
| Change | Description |
|---|---|
| Index Price Update | Updated the Index price for the Bitcoin – U.S. Dollar trading pair to a specific value as of December 22, 2023. |
| Bitcoin Counterparty Definition | Clarified that the third party involved in Share transactions is not an Authorized Participant but may be an affiliate. |
| Share Redemption Process | Modified the redemption process for Shares, specifying cash-only transactions and detailing responsibilities for Bitcoin Counterparties. |
| Marketing Support Arrangements | Added provisions for potential marketing support arrangements with fees payable by the Sponsor and/or Sub-Adviser. |
| Creation and Redemption Risks | Outlined risks associated with creation and redemption processes, particularly during unanticipated difficulties. |
| Trading Balance Limitation | Set a limit on the amount of bitcoin in the Trading Balance, tied to specific transactional or expense needs. |
| Service Provider Concentration Risk | Highlighted the risks associated with the Bitcoin Custodian and Prime Broker serving multiple competing products. |
| Post-Trade Financing Agreement Update | Amended details related to borrowing bitcoin or cash from the Lender to facilitate timely transactions. |
| Interest Rate on Trade Credits | Established the determination of interest rates on Trade Credits based on various factors. |
| Authorized Participant Transaction Model | Specified that Authorized Participants will only deal with cash for creating and redeeming Shares. |
| Creation and Redemption Procedure Update | Updated procedures for the creation and redemption of Baskets, including expense responsibilities. |
| Reduced In-Kind Transaction wording | Reduced the wording of the possibility of in-kind transactions for creating and redeeming Shares, pending regulatory approval. |
| Use of Bitcoin for Expenses | Indicated that the Trust might use Bitcoin to pay certain expenses, with implications under IRS guidance. |
| Taxation Changes on Share Sales | Updated tax implications for shareholders on the sale of Shares and the redemption process. |
| Additional Expenses Disclosure | Provided details on the estimated expenses related to the issuance and distribution of Shares. |
The revised filing…
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