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ARK Invest Plans to Buy Canadian Bitcoin ETF shares

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Sep. 14 2021, Published 8:08 a.m. ET

ETFs are a great way to invest in stocks without having to invest in only one. They can diversify your investment portfolio while making it easier to manage.

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Cathie Wood’s ARK Invest is known for its ETFs. One of its eight ETFs, the ARK Next Generation Internet ETF, focuses on AI, big data, cloud computing, cybersecurity, and blockchain technology. None have had direct exposure to Bitcoin, but that could change. On Sep. 10, ARK Invest updated its prospectus filing to the SEC, giving it clearance to invest in Canadian Bitcoin ETFs. A prospectus is a required document that’s filed with the SEC, allowing investors to know what securities the ETF will offer.

ARK Invest’s Next Generation Internet ETF (ARKW) moves to buy Canadian Bitcoin ETFs

The filing was for ARK Invest’s Next Generation Internet ETF (ARKW), and the filing mentioned that the fund “may have exposure to cryptocurrency, such as Bitcoin, indirectly through an investment in a grantor trust or in other pooled investment vehicles, such as exchange-traded funds domiciled in Canada”.

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Bitcoin ETFs are funds that include the equity securities of companies that are involved with the development of blockchain technology. So, a Bitcoin ETF could contain shares of companies such as Coinbase, PayPal, and Robinhood, since they allow investments and transactions involving crypto.

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Why aren’t there Bitcoin ETFs in the United States?

It's not just retail investors interested in Bitcoin ETFs—companies are seeking them as well. Fidelity, Valkyrie, SkyBridge Capital, and NYDIG have all reportedly filed to list a Bitcoin ETF in the U.S.

However, the SEC has been unresponsive and uncooperative when it comes to crypto. In Sep. 2021, the SEC threatened to file a lawsuit against Coinbase for launching a lending feature. Filings for the Grayscale Bitcoin Trust, a trust that mirrors the movement of Bitcoin, have also been unsuccessful.

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What's the Grayscale Bitcoin Trust (GBTC)?

Commonly mistaken as an ETF, GTBC is a trust that periodically allows investors to privately purchase shares. On its website, Grayscale says it’s currently not offering private placement into the trust. Originally called the Bitcoin Investment Trust, the GTBC reportedly holds over 650,000 Bitcoin, or nearly 50 percent of the 1.4 million Bitcoin held by publicly traded companies. It’s a product that can be used to invest in Bitcoin, as the trust almost copies its movements, except you’re not directly investing in Bitcoin.

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ARK Invest is a heavy investor in GBTC, having over eight million shares (valued at over $310,000) of the trust in its ARKW ETF, GBTC is the ARKW ETF's second-largest holding, comprising 5.52 percent of the ETF. However, as its recent Bitcoin ETF filings suggest, ARK Invest may be looking for alternatives to the trust—there have been complaints of GBTC’s high fees for having private shares.

The Canadian Bitcoin ETF that ARK Invest could be eyeing instead is the Amplify Transformational Data Sharing ETF (BLOK). The ETF, which has increased by over 15 percent in value in the last four months, holds securities in companies involved in blockchain technology.

How can you invest in Canadian ETFs?

Some brokers require U.S. residents to open a specialized brokerage account to invest in Canadian ETFs. It’s best to contact your brokerage for information on ways to invest in them. You could also wait for ARK to get exposure to them, and then buy an ARK ETF.

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