Bitcoin exchange traded funds (ETFs) could soon be on the horizon in the US, according to ARK Invest chief executive, Cathie Wood.
Speaking at the CFA Societies Investment Conference, Wood was asked about the progress of the firm’s application for a Bitcoin vehicle.
The firm had applied for an ETF that tracked Bitcoin futures, ARK 21Shares Bitcoin Futures Strategy ETF, which planned to invest in Bitcoin futures contracts trading on commodity exchanges.
She said that ARK’s application was one of 14 being considered by the Securities and Exchange Commission (SEC) but that competition from Canada was likely to force the SEC’s hand.
“We have filed an application [with the SEC] but that does not mean we will necessarily go through with it because we are trying to understand the tax ramifications for retail investors and we are concerned about that.
“I think the SEC is feeling the pressure because Canada has a number of Bitcoin ETFs already and there is a migration towards them on the Toronto Stock Exchange which any US investor can buy. So, I think they will make a decision fairly soon.”
Meanwhile, she said China was “playing with fire” and was likely to slow down more than people were anticipating which had led the firm, which had US$52 billion ($70 billion) in assets under management, to reduce its exposure.
“Last weekend, we saw China was going after its own regulators in the financial services industry and that is playing with fire,” Wood said.
“I don’t know how they are going to contain this and China risks slowing down much more significantly than many people understand.”
She said she had already begun reducing the firm’s exposure to China, particularly in its flagship portfolio which held the most high conviction positions. According to its most recent factsheet, the ARK Innovation ETF had 4% allocated to Asia Pacific and none of its top 10 holdings were Asian companies.
“China became easy to sell as there was one crackdown after another, first it was Jack Ma, then it was online education, then it was gaming then it was data… Any company with data became a target. We have taken down our positions and consolidated some into low-margin companies like [e-commerce firm] JD.com.”
