Bitcoin ETF: Ark 21Shares Succumb to SEC Redemption Model

The duo of ARK Invest and 21Shares have submitted an S-1 amendment for their spot Bitcoin ETF to the United States Securities and Exchange Commission (SEC). From the filing, it looks like the firms have agreed to the agency’s “cash create” redemption mechanism for the proposed product.

SEC Adamant on Cash Creates Model for Bitcoin ETF

Per a post shared by Bloomberg ETF analyst James Seyffart, ARK 21Shares filed an amended copy of its S-1 form dated December 18, 2023. From the content of the document, it looks like ARK 21Shares has succumbed to the cash creation and redemption model that the SEC has been trying to preach to all the applicants of the spot Bitcoin ETF. 

Last month, the SEC reportedly met with top investment asset management firm BlackRock. Their conversation was centered around the choice of either cash creates model summary or “in-kind” redemption model for the impending ETF offering. The SEC advised BlackRock and other potential candidates of the spot BTC ETF to adopt the cash create model for the redemption of the ETF product. 

So far, BlackRock and Fidelity have highlighted the in-kind model as their redemption mechanism of choice. ARK 21Shares on the other hand, seem to prefer cash creation, just like the SEC suggested. The decision to choose cash creates as its redemption model per the latest filing could be another strategy for ARK 21Shares to secure a position in the “front row” of those whose applications for Bitcoin ETF will likely be considered first by the SEC.

Ark Invest and the Approval Deadline

The deadline for the SEC to make a decision on ARK 21Shares Bitcoin ETF filing is drawing closer and the Florida-based asset management firm is very confident about getting a positive response from the regulator. Specifically, the approval window for a decision from the SEC for the ARK 21Shares Bitcoin ETF remains January 10, 2024.

ARK 21Shares once argued that its application would be considered first before that of others, considering the hierarchy of submission.

At the same time, industry experts and ETF analysts have explained that the SEC may not be interested in giving any of the applicants the first-mover advantage. ARK 21Shares is not perturbed by this information as it has moved beyond the third amendment of its Bitcoin ETF filing.