Fortune's exclusive interview with Cathie Wood: Will ARK secure the first Bitcoin spot ETF?

Source: Fortune

Author: Anna Tutova

Translation: Azuma, Odaily Planet Daily

On July 6, Fortune magazine published an interview with ARK Invest CEO Cathie Wood, focusing primarily on the highly anticipated Bitcoin spot ETF. In the exclusive interview, Wood reviewed the history of ARK Invest's application submissions and emphasized that she does not believe BlackRock has an advantage over ARK Invest in this regard.

Last week, I met Cathie Wood at the "ImPower Fund Forum" held in Monaco and had the privilege of sitting down with her to discuss ARK Invest, which focuses on disruptive innovation industries and is known for its bold investments in Crypto and Web3.

Recently, ARK Invest has made headlines multiple times for resubmitting its Bitcoin spot ETF application to the U.S. Securities and Exchange Commission (SEC). Cathie Wood stated that this application was submitted after the SEC had previously rejected applications from ARK Invest and other similar companies, which may give ARK Invest the opportunity to launch the first Bitcoin spot ETF in the U.S. and seize a market advantage.

In our conversation, Cathie Wood shared her views on the potential of Bitcoin, the challenges of the regulatory environment, and her vision for the future of digital assets. To keep the text concise and clear, the interview Q&A has been edited.

Q1: Can you describe how the idea of founding ARK Invest came about?

Cathie Wood: Before ARK Invest was founded, especially after the tech and telecom crash and the economic crisis of 2008-09, I saw traditional asset management moving away from innovation and leaning towards passive and benchmark-sensitive strategies. I said, "No, we must focus on innovation because there are five major technologies evolving right now." These include DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology, all developing simultaneously.

These innovations will bring explosive growth—what we call exponential growth—and we believe people have not yet understood this. They will disrupt the traditional world order, so we wanted to focus on transformation and educate more people about it. We have an open research ecosystem and provide our research findings for free. We are pleased to see people comment on our research, especially feedback from frontline innovators, which gives us more insights and tests our hypotheses.

Q2: What about your involvement in cryptocurrencies and blockchain? I understand you started personally investing in Bitcoin in 2015. Can you share your initial impressions of Bitcoin and this technology?

Cathie Wood: We became curious about Bitcoin starting in 2011. Our Chief Futurist Brett Winton was fascinated by it, so we often discussed it. After ARK Invest was created, we began to allocate resources specifically for research, and now ARK Invest has three cryptocurrency analysts.

In 2015, our analysts wrote a paper. I had my mentor, the renowned economist Art Laffer, read it and critique it. When he learned what Bitcoin was, he said, "This is what I've been waiting for since the dollar abandoned the gold standard!" My reaction at the time was, "Well, this sounds amazing!"

That was in 2015, when Bitcoin was priced at $250, and we established our first Bitcoin position through GBTC.

Q3: BlackRock recently submitted a Bitcoin spot ETF application, while ARK Invest had previously submitted an application in collaboration with 21 Shares last April (which was rejected). Do you think this attempt will be successful?

Cathie Wood: Well, many people believe that BlackRock knows something about the SEC that we don't, but we don't think that's true. We believe this situation (referring to the SEC's repeated rejections) has been ongoing for a long time, but the "Grayscale vs. SEC" case (which questions why the SEC rejected its Bitcoin spot ETF application) is about to conclude soon—possibly in August. If the SEC loses this case, the probability of Bitcoin spot ETF approval will increase.

We have submitted our application, and the SEC is expected to review it by mid-January next year, while BlackRock's will be reviewed by March next year. The SEC has already approved some Bitcoin futures ETFs and recently approved a leveraged Bitcoin futures ETF. Futures involve swaps, while spot ETFs (at least the Grayscale version) are fully backed by Bitcoin stored in cold wallets, so we believe that spot trading is safer than futures. In our view, the SEC's approval situation (approving futures ETFs while rejecting spot ETFs) is contradictory.

Odaily Planet Daily Note: Grayscale filed a lawsuit against the SEC in June 2022. Previously, Grayscale's application to convert GBTC into a Bitcoin spot ETF was rejected by the SEC, which cited concerns about fraud and manipulation in the spot Bitcoin market. Grayscale argued that any fraudulent activity in the spot market would also affect Bitcoin futures prices, but the SEC has approved some Bitcoin futures ETF applications, making this logic untenable.

Q4: If the SEC ultimately approves the Bitcoin spot ETF, to what extent do you think this will change the development of the crypto industry?

Cathie Wood: We have always been concerned that the SEC would drive innovation out of the U.S. Innovation has always been in America's DNA, which is why we are pleased that both the judiciary and legislative branches are getting involved.

So this (approval of the Bitcoin spot ETF) could mean that once we fully implement the rules, we will stop driving innovation away and bring more innovation back. This will also become a global phenomenon, and we are very excited because many other innovation centers are looking to achieve this, and we want to do it too, as this is a global movement.

Q5: Do you think the SEC will favor BlackRock? That is, approve their application but reject yours?

Cathie Wood: We don't think so. We know that their application includes a supervisory sharing clause, while ours does not, but as far as I know, modifying our application won't take too much time, and all institutions' applications are moving in this direction.

Odaily Planet Daily Note: This interview with Fortune was completed last week but was published for the first time today. Shortly after the interview was completed, ARK Invest modified its application to include a supervisory sharing agreement similar to BlackRock's.

Q6: Currently, there are other cryptocurrency news items attracting attention, such as the recent launch of EDX Markets, while other large institutions like Citadel Securities and Fidelity are also entering the cryptocurrency space. What are your thoughts on this?

Cathie Wood: Yes, I think some events from last year to now have disrupted the pace of institutional development, such as FTX and all the turmoil, as well as some lawsuits, especially the SEC's lawsuit against Coinbase. But I believe we have seen the worst of it, and interestingly, we find that institutions want to learn more; they are becoming more mature. So, you can see they want to prepare for a new asset class.