An amended filing for the joint spot Bitcoin exchange-traded fund (ETF) by ARK Invest and 21Shares has emerged as a promising sign of progress toward approval. This updated filing, submitted on October 11 to the Securities and Exchange Commission (SEC), includes additional details regarding the proposed Bitcoin ETF’s operational aspects, addressing concerns raised by the SEC.

Addressing SEC Concerns

Bloomberg’s senior ETF analyst, Eric Balchunas, emphasized that the changes in the filing could be seen as a direct response to concerns expressed by the SEC. These adjustments, according to Balchunas, indicate that ARK has taken into account the SEC’s comments and has effectively addressed them, effectively putting the ball back in the SEC’s court. Balchunas views this as a positive sign of solid progress toward ETF approval.

Balchunas noted that the changes made to the filing are spread throughout, resulting in a document that is five pages longer. He also mentioned that none of the comments raised by the SEC were particularly new or insurmountable.

This is also new (and again something we heard SEC asked about): “The Trust’s assets with the Custodian are held in segregated accounts on the bitcoin blockchain, commonly referred to as “wallets,” and are therefore not commingled with corporate or other customer assets.” pic.twitter.com/57TmnNi1lE

— Eric Balchunas (@EricBalchunas) October 11, 2023

One noteworthy change is ARK’s acknowledgment that the fund’s net asset value (NAV) calculations do not align with Generally Accepted Accounting Principles (GAAP), which is a standard used by the SEC.

Clarity on Asset Custody

The amended filing provides clarity about the custody of the ETF‘s assets, which are held by Coinbase Custody. It explicitly states that these assets are kept in “segregated accounts” and are not commingled with corporate or other customer assets. This clarification suggests effective communication between ARK and the SEC about addressing the regulator’s concerns.

Positive Signs for Future Approval

Still chuckling a bit at this “electricity usage” risk factor. Ark couldn’t even be bothered to put in a coherent header summary or more than a couple short sentences. You know the convo w/ the SEC was like “oh yea, good call Mr. SEC attorney, this is definitely material /s” https://t.co/unIArFDKl8

— Scott Johnsson (@SGJohnsson) October 12, 2023

According to Scott Johnsson, a general partner at Van Buren Capital, another noteworthy addition in the amended filing is a comment related to Bitcoin’s potential use for illegal purposes and its environmental impact due to mining. The filing acknowledges that these factors could impact the ETF‘s value. Johnsson’s assessment of ARK’s amendments indicates that the agency does not appear to be creating unnecessary roadblocks through the disclosure review process.