ARK Asks SEC To Approve Tokenized Share Class of Venture Fund

ARK Investment Management has submitted an exemptive application to the U.S. Securities and Exchange Commission seeking permission to issue a new share class of ARK Venture Fund with ownership recorded using distributed ledger technology. The SEC published notice of the request on Aug. 24 and set Sept. 18 as the deadline for parties to request a hearing. ARK pursued the standard exemptive application process rather than wait for a separate tokenization-focused rule the agency has discussed but not finalized.

The proposed amended order would create two distinct share classes. An Exchange Class could be listed on a national securities exchange, while a Tokenized Class would have ownership recorded on distributed ledger technology and be permitted to trade on registered alternative trading systems under Regulation ATS, on other quotation media, or via peer-to-peer transfers between whitelisted wallets. The application explicitly stops short of seeking permission to list or quote the tokenized shares on decentralized finance platforms.

Tokenized Class shares would be issued at net asset value through the fund’s subscription process, sold without a sales load, and distributed either by registered broker-dealers or directly by the fund’s transfer agent. That class would carry its own expenses, including transaction fees tied to share sales, repurchases and dividend distributions. ARK is requesting relief under sections 6(c), 18 and 17(d) of the Investment Company Act and under Rules 23c-3 and 17d-1; Dechert serves as counsel on the filing.

The filing does not identify any specific tokenization vendor, transfer agent or blockchain, referring only to categories such as “tokenization agents” and “the Fund’s transfer agent” among expected expenses. According to the fund’s semi-annual report, The Bank of New York Mellon is the current transfer agent, administrator and custodian. The report also shows ARK Venture Fund held $562 million in total assets as of Jan. 31, and that its existing share classes had an aggregate non-affiliate market value of about $912.6 million based on May 15 pricing.

Regulatory guardrails for tokenized fund shares remain in flux. The SEC has not yet adopted the industry-anticipated tokenization "innovation exemption," and recent agency activity has focused on related topics: Chair Paul Atkins released a Regulation Crypto Assets proposal on Aug. 18 aimed at offering exemptions for crypto asset issuers (open for comment until Oct. 20), and the SEC proposed an update to transfer agent rules on Sept. 1 with a comment period running through Nov. 3. ARK’s filing also notes the fund holds equity in Securitize and a $10 million convertible note tied to that company, which has been active in tokenization arrangements for registered products.