Cathie Wood is making another massive splash in the digital asset ocean. Ark Invest just submitted paperwork to the SEC for two groundbreaking exchange traded funds that target a wider basket of cryptocurrencies. These filings signal a bold move beyond simple Bitcoin exposure and offer investors a strategic way to tap into the broader crypto market performance.
The move represents a significant shift in institutional strategy. Investors are now looking for diversified avenues to capture potential gains from the wider blockchain ecosystem rather than betting on a single horse.
Inside the Ark CoinDesk 20 Crypto ETF Structure
The first filing details a fund known as the ARK CoinDesk 20 Crypto ETF. This financial product is designed to track the CoinDesk 20 Index. This specific index serves as a benchmark for the digital asset market by including the largest cryptocurrencies based on volume and market capitalization.
Investors should note that this fund does not hold the actual tokens. The strategy relies entirely on futures contracts.
Ark Invest plans to list this ETF on the NYSE Arca exchange. The fund aims to achieve its investment goals by investing in index futures traded on regulated exchanges. This allows the fund to mirror the performance of top digital assets without the custodial complexities of holding spot crypto.
The CoinDesk 20 Index is quite comprehensive. It covers a vast majority of the crypto market share.
Here are some of the key assets included in this index:
- Market Leaders: Bitcoin (BTC) and Ethereum (ETH).
- Smart Contract Platforms: Solana (SOL), Cardano (ADA), Avalanche (AVAX), and Polkadot (DOT).
- DeFi and Payments: Uniswap (UNI), Chainlink (LINK), XRP, and Bitcoin Cash (BCH).
- Emerging Sectors: Near Protocol (NEAR), Aptos (APT), and Hedera (HBAR).
This diversification is a key selling point. It allows traditional investors to gain exposure to the high volatility and potential high returns of altcoins like Solana and Avalanche through a regulated brokerage account.
The decision to use futures rather than spot holdings is likely a tactical move to navigate the current regulatory landscape more smoothly.
ark invest coindesk 20 crypto etf filing SEC document
Strategic Twist with the Ex Bitcoin Fund Alternative
The second filing introduces a fascinating concept called the ARK CoinDesk 20 ex-Bitcoin Crypto ETF. This product is specifically engineered for investors who may already own a significant amount of Bitcoin.
Many crypto enthusiasts already hold Bitcoin in cold storage or other ETFs. They often want exposure to the rest of the market without doubling down on their Bitcoin risk.
This fund tracks the daily performance of the same CoinDesk 20 Index but removes the Bitcoin component. To achieve this, Ark Invest proposes a sophisticated yet logical strategy. The fund will take long positions in the standard CoinDesk 20 futures contracts.
Simultaneously, it will take short positions in CME Bitcoin Futures.
This mathematical combination effectively strips away the price action attributed to Bitcoin. The result is a pure play on the “rest of the market.” This includes Ethereum and the other eighteen altcoins listed in the index.
This product solves a major redundancy problem for portfolio managers who want to separate their Bitcoin allocation from their general crypto growth strategy.
It allows for more precise portfolio construction. An investor can now control their Bitcoin weighting and their “Altcoin” weighting independently using regulated products.
Futures Contracts Versus Spot Holdings Explained
Understanding the difference between futures and spot exposure is critical for potential investors. Most of the hype in early 2024 surrounded the approval of Spot Bitcoin ETFs. Those funds hold the actual digital coins in a secure vault.
Ark Invest is taking a different route with these specific filings.
The proposed funds will hold cash and cash equivalents to collateralize futures contracts. These contracts are agreements to buy or sell the asset value at a future date.
Here is a breakdown of why this distinction matters:
| Feature | Spot ETF | Futures ETF (Ark Proposal) |
|---|---|---|
| Asset Ownership | Fund holds actual tokens | Fund holds contracts & cash |
| Tracking Error | usually very low | Can vary due to “roll costs” |
| SEC Comfort | Higher hurdle historically | Generally easier to approve |
| Custody Risk | Relies on cold storage | Relies on clearing houses |
The Franklin Templeton Crypto Index ETF filing differs here. That firm filed for a spot index ETF that would actually hold the assets. Ark seems to be betting that a futures based product has a faster path to market.
By utilizing the futures market, Ark avoids the regulatory quagmire of classifying tokens like Solana or Cardano as unregistered securities.
This is a clever workaround. The SEC has been hesitant to approve spot products for assets they view as potential securities. Futures contracts regulated by the CFTC offer a safer regulatory harbor.
Rising Competition in the Crypto Index Fund Race
The race to dominate the crypto index fund market is heating up rapidly. Ark Invest is not the only asset manager trying to capture this emerging sector.
WisdomTree filed for a similar product late last year. Their proposal involves a fund that tracks the CoinDesk 20 as well. However, WisdomTree aims to hold the assets directly in a spot capacity.
Grayscale is also expanding its footprint. They recently filed for a unique ETF centered around Binance Coin (BNB) and already operate a smaller index fund tracking the top five assets.
The timing of these filings is no coincidence.
“The market is signaling a maturing phase where investors want broad beta exposure, not just single asset bets.”
We are seeing a trend toward “Altseason” preparation. As Bitcoin stabilizes near all time highs, capital often rotates into smaller cap tokens. These ETFs would provide the plumbing for institutional capital to flow into that rotation efficiently.
If approved, these funds could bring billions in liquidity to the altcoin market. It validates the longevity of projects like Chainlink and Polkadot in the eyes of Wall Street.
Competition drives innovation and lowers fees, which is ultimately a massive win for the retail investor looking to diversify.
The SEC will now review these S-1 registration statements. The timeline for approval can be lengthy. However, the precedent set by Bitcoin and Ethereum ETFs provides a glimmer of hope for a timely decision.
Ark Invest has clearly positioned itself to lead the next phase of crypto integration into traditional finance. Whether through the broad index or the unique ex-Bitcoin strategy, they are offering tools that sophisticated traders have been demanding for years.
In summary, Cathie Wood and Ark Invest are pushing the boundaries of what is possible in crypto ETFs. They are moving beyond the basics to offer sophisticated, diversified, and strategically structured products. These filings for the CoinDesk 20 trackers represent a maturation of the asset class. It acknowledges that the crypto market is far more than just Bitcoin. Investors now have the prospect of accessing the growth of the entire digital economy through a single ticker symbol.
What are your thoughts on this new move by Ark Invest? Do you prefer holding Bitcoin separately from your altcoins? Share your opinion in the comments below using the hashtag #CryptoETF if you are discussing this on social media!
