ARK Investment Management has filed an exemptive application with the U.S. Securities and Exchange Commission (SEC), seeking permission to issue a tokenized share class for its ARK Venture Fund.
The SEC published notice of the application on Aug. 24 and set Sept. 18 as the deadline for hearing requests. ARK Venture Fund is a continuously offered closed-end interval fund with $562 million in total assets as of Jan. 31.
Two proposed share classes
The filing proposes two classes. An exchange class would list on a national securities exchange, while a tokenized class would use distributed ledger technology to record ownership.
Tokenized shares could trade through registered alternative trading systems or move peer-to-peer between whitelisted wallets. They would be issued at net asset value without sales charges and distributed by registered broker-dealers or the fund's transfer agent. Investors would bear trading costs and other related expenses.
Filing does not identify blockchain provider
ARK is seeking relief under Sections 6(c), 18 and 17(d) of the Investment Company Act, as well as Rules 23c-3 and 17d-1. Dechert is serving as legal counsel.
The application does not identify a tokenization service provider or blockchain. It only lists fee categories for a tokenization agent and a fund transfer agent. BNY Mellon currently acts as the fund's transfer agent, administrator and custodian.
ARK Venture Fund holds an equity stake in Securitize and $10 million in convertible notes issued by the company. Securitize serves as transfer agent for BlackRock's BUIDL fund.
The SEC has not formally adopted the tokenization “innovation exemption” framework anticipated by the industry, and related rules remain under development.