In what seemed like an inevitable development, ARK Invest and its founder Cathie Wood have joined forces with 21Shares U.S. LLC to file for the launch of the ARK 21Shares Bitcoin ETF (ARKB). ARK and 21Shares are joining a crowded field of competitors vying to be the first U.S. bitcoin ETF approved.
The news was first broken by Eric Balchunas on Twitter, who noted that it would be the 12th bitcoin ETF filing since just the end of last year.
The filing shouldn't be at all surprising for a few reasons.
First, Cathie Wood has been a big bitcoin and cryptocurrency bull for a while. The Grayscale Bitcoin Trust (GBTC), perhaps the closest thing to a bitcoin ETF in the United States at the moment, is already a top 10 holding in the ARK Next Generation ETF (ARKW) at nearly 4% of total assets. GBTC charges a 2% annual expense ratio for this product, so it's not necessarily inexpensive to hold (although 2% is barely a blip on the radar in the cryptocurrency world). Launching a lower cost bitcoin fund would come much cheaper and would provide easy access to bitcoin for other ARK ETFs potentially interested in holding a position. ARK's own 3D Printing ETF (PRNT) is already that 2nd largest holding in the ARK Space Exploration ETF (ARKX).
Second, Cathie Wood joined the board of Amun, the parent company of 21Shares, the issuer with which ARK would be partnering on this, just recently in May. If you're wondering exactly who 21Shares is, they are a big crypto exchange-traded product provider over in Europe. They've got about $2 billion in assets spread across more than a dozen ETF products, including those focused on bitcoin, ethereum, ripple, polkadot and cardano. Balchunas also noted on Twitter that this filing, if approved, would pave the way for 21Shares' entry into the U.S. market.
In theory, the first issuer to get a bitcoin ETF approved would probably draw $1 billion in assets pretty quickly, but it's unclear when that will happen and who the big winner would be. VanEck just had a decision on its bitcoin ETF delayed as have others in the recent past. The SEC for its part has shown no real motivation to get a product approved, despite existing approvals in both Europe and Canada. Several members of the governing body have continually expressed their concern over a lack of regulation and the potential for shareholder harm if a bitcoin ETF were to be approved.
While there are a few other major ETF issuers on the list of those having filed for bitcoin ETFs already, ARKB would clearly be the biggest name of the bunch. Given the timing, it seems unlikely that this fund would be the first to get the nod (unless the SEC eventually decides to approve them all at once).
I maintain my original prediction that a bitcoin ETF will not get approved until 2022 at the earliest.