Major crypto news: Cathie Wood’s ARK recently sold $12 million worth of stock in Coinbase.
See below for all the details.
Summary
ARK’s sale of Coinbase stock: the details
As anticipated above, ARK Invest, led by Cathie Wood, sold Coinbase (COIN) stock worth $12 million.
Meanwhile, the stock hit an almost one-year high after the exchange announced a surveillance sharing agreement with five spot Bitcoin (BTC) exchange-traded fund (ETF) candidates.
We also point out that Coinbase’s shares closed 16% higher after Thursday’s announcement.
Previously, the Securities and Exchange Commission (SEC) had said that global oversight sharing agreements were critical to the approval of spot Bitcoin ETFs.
Across all ARK funds, the technology-focused investment manager owns nearly 11 million shares in Coinbase, making it one of the largest shareholders. Overall, Coinbase’s share accounts for 6.2% of ARK’s total portfolio weight.
In addition, according to market data, the average estimated cost per COIN in different funds is $239.60 for the Ark Fintech Innovation ETF (ARKF), $254.65 for the ARK Innovation ETF (ARKK), and $242 for the ARK Next Generation Internet ETF (ARKW).
In early June, ARK made a purchase of Coinbase shares worth $21.6 million, taking advantage of the drop in share price caused by the lawsuit filed by the SEC against the exchange.
On Tuesday, COIN closed up nearly 10% to $89.15, and the stock has risen 72% since the SEC sued the exchange on 6 June.
Coinbase as surveillance partner for Bitcoin ETFs
Recently, BZX Exchange, operated by Cboe, selected cryptocurrency exchange Coinbase as the marketplace for its surveillance sharing agreement.
In fact, BZX Exchange re-filed its spot Bitcoin exchange-traded fund (ETF) requests with multiple prospective Bitcoin ETF issuers.
Over the past few weeks, companies including Fidelity, WisdomTree, VanEck, ARK Invest, Galaxy/Invesco, and BlackRock have all filed applications for spot Bitcoin ETFs, hoping to launch a product that the US Securities and Exchange Commission (SEC) has rejected for years.
Hence, while BlackRock has filed with the Nasdaq, the other companies are working with Cboe.
In recent weeks, the SEC informed some Nasdaq and Cboe applicants that their applications were “inadequate” because they did not name the market with which the fund sponsors are working on their oversight sharing agreements, as reported by the Wall Street Journal.
In its filed applications, Cboe stated that Coinbase’s platform
“accounts for a substantial portion of USD-denominated US-based Bitcoin trading,”
thereby naming the US cryptocurrency exchange as a partner for these surveillance sharing arrangements.
Specifically, the filing states the following:
“The Spot BTC SSA (Surveillance Sharing Agreement) is expected to have the hallmarks of a surveillance sharing agreement between two members of the ISG, which would give the exchange additional access to data relating to spot Bitcoin trades taking place check with Coinbase if the exchange determines it is needed as part of its surveillance program for Commodity-Based Trust Shares in a similar way to how exchanges share information as part of the ISG.”
Coinbase stock up 13%, why?
The Cboe news caused a stir in the market, however, in the days leading up to Tuesday’s developments, Coinbase experienced an increase in trading volume.
As we mentioned, on 30 June, Cboe resubmitted the application, this time naming Coinbase as a partner with whom it will share responsibility for preventing abuse.
On Monday, 3 July, Coinbase’s shares rose 13%, Reuters reported.
In their 196-page amendment, Cboe makes a number of arguments to the SEC, outlining why it no longer makes sense to deny approval of Bitcoin ETFs, if it ever did.
Some of these arguments are familiar from recent litigation involving asset managers such as Grayscale Investments.
On Monday, the company’s lawyer filed a request with a federal judge to reverse an adverse decision on Grayscale’s spot Bitcoin ETF.
The lawyer specifically pointed out that spot ETFs carry less risk than existing ones. Nevertheless, Cboe’s amendment represents one of the strongest arguments to date in this long battle with the SEC.
