Ark Invest founder Cathie Wood passed on buying the first Bitcoin Futures ETF

She cited an investigation into tax ramifications as one of Ark Invest’s reasons for withholding for now.

Ark Invest founder and CEO Cathie Wood did not invest in the ProShares Bitcoin Strategy Exchange Traded Fund, or ETF, on opening day, according to Business Insider

Wood said about the ETF’s debut:

“No, we did not [invest]. We’re looking at this very carefully […] there are some tax ramifications we’d like to understand more having to do with contango versus more normal backwardation.”

The contango of the ETF refers to when the future price of the commodity is higher than the spot price. Backwardation is when the forward price of the futures contract is lower than the spot price in a downward trend.

This past June, Cathie Wood’s Ark Invest partnered with 21 Shares to file for its own Bitcoin ETF. She is also no stranger to the equities market when it comes to investing in cryptocurrencies.

One of her fund’s, Ark Investment Management, was approved to invest in Canada’s Bitcoin ETF under the Ark Next Generation ETF. Ark Invest owns 8.3 million shares of Grayscale Bitcoin Trust (GBTC), with Bitcoin and Ethereum making up a good percentage in Ark Invest’s portfolio.

In the spring, Ark Invest also added Coinbase stock to three of its ETFs, Ark Innovation ETF (ARKK), Ark Next Generation Internet ETF (ARKW), and Ark Fintech Innovation ETF (ARKF).

Wood said she is looking for the next FAANG investment to help her investors. FAANG is a stock market acronym describing the five biggest American tech stocks: Facebook, Amazon, Apple, Netflix and Google. The FANG term was initially coined by Jim Cramer in 2013.

The Bitcoin Strategy ETF had the highest ever first day of natural volume for an ETF, and the second highest ETF on the overall volume on its first day of trading.

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SEC Chair Gary Gensler responds to concerns about first Bitcoin-linked ETF

In the same interview, Proshares CEO Simeon Hyman opined that regulated futures traded in a 40-act ETF will open the opportunity to get BTC exposure to a lot of folks who may have been waiting on the sidelines.

SEC Chair Gary Gensler and Proshares CEO Simeon Hyman discussed the launch of the first Bitcoin-linked ETF in a CNBC breaking news segment on Tuesday.

Proshares Bitcoin Strategy ETF, also known as BITO, is based on CME Bitcoin futures contracts. CNBC commentator Bob Pisano shared concerns from some investors that BTC futures could deviate from the BTC spot price:

“The futures market is a better place for price discovery,” said Hyman. “The CME futures market trades more volume than the largest US crypto exchange. We launched a similar mutual fund on 7/28 and since we launched on Friday, the Bitcoin Reference Rate is up 52 percent, our BTC mutual fund is up 52 percent and the BTC Greyscale Trust is up 37 percent.”

The debut of BITO follows announcements that other BTC-linked funds, including Valkyrie’s Bitcoin Strategy ETF, are set to start trading on the Nasdaq. A new blockchain-industry-based fund, called the Volt Crypto Industry Revolution and Tech ETF, intends to begin trading soon as well.

Pisano asked SEC Chair Gary Gensler about earlier comments where he said he did not have the same concerns with issuing BTC futures-linked funds versus a fully-linked BTC fund. Gensler confirmed:

“What we are trying to do is bring new projects into the investor-protected perimeter. BTC futures have been overseen by the SEC’s sister agency, The Commodities Futures Trading Commission, for the past four years. You have something that’s been overseen for the past four years by a federal regulator and it’s also been wrapped up in the SEC’s jurisdiction through the Investment Company Act of 1940.”

Hyman expressed his confidence in the new fund noting the history of BTC’s price action, US securities laws, and the opportunity for a new opportunity for investors:

“There’s a lot of history here. We believe it will trade quite well. We think regulated futures traded in a 40-act ETF will open the opportunity to get BTC exposure to a lot of folks who may have been waiting on the sidelines.”

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