ARK requests SEC approval for tokenized share category for $562 million venture capital funds

ARK Asset Management applies to the SEC for approval of tokenized shares of its venture capital funds

ARK Investment Management has formally filed an application with the U.S. Securities and Exchange Commission (SEC) to approve the establishment of a tokenized share category for its $562 million venture capital fund. The move aims to use distributed ledger technology (DLT) to maintain ownership records.

Core Summary

• ARK has applied to the SEC to approve the tokenized share category for its $562 million venture capital fund.
• These shares can be traded through a registered Alternative Trading System (ATS) platform or between approved wallets, and ownership records will be registered using distributed ledger technology.
• For the proposed share category, ARK has not yet designated specific blockchain or tokenization service providers.
• The SEC has set a September 18 deadline for hearing requests before regulators can take action on ARK's application.

Application Details and Trading Mechanism

According to documents filed with the SEC, ARK Venture Fund hopes to add a "Tokenized Class" next to the existing "Exchange Class" by amending the exemption order granted by regulators in November 2025. The SEC issued an announcement of the request on August 24 and set September 18 as the deadline for hearing requests.

ARK initially submitted the application on May 20, and subsequently submitted amendments on June 11 and August 7, respectively (Document Number: 812-16031). The filing seeks exemptions under sections 6(c), 18 and 17(d) of the Investment Company Act of 1940, and Rules 23c-3 and 17d-1.

The proposal will provide different secondary market trading channels for two new categories:

• Exchange category share: Can be listed on national stock exchanges.
• Tokenized category shares: Ownership will be recorded through distributed ledger technology.

Tokenized shares can be traded through alternative trading systems registered under the ATS regulations, other quotation media, or point-to-point transfers between approved wallets. It should be noted that ARK has not asked the SEC to allow listings or quotes for these shares on the decentralized financial (DeFi) platform.

Leverage existing fund structures

While regulators are developing separate rules that may regulate tokenized securities, ARK is seeking approval through the SEC's existing exemption application process. The company made clear that its application was not seeking regulatory exemptions from the technology itself used to maintain shareholder records. In a footnote to the application, the applicant stated: "We have not sought exemption relief regarding how the fund uses distributed ledger technology to maintain its shareholder records."

ARK Venture Fund is a closed-end range fund that continues to issue, with total assets of US$562 million as of January 31. As of May 15, its existing D, S and U share prices were US$49.83, US$49.69 and US$49.70 respectively, and the total unassociated market value was approximately US$912.6 million.

The venture fund is independent of ARK's better known ARK Innovation ETF, which has US$6.55 billion in assets and is operated through the ARK ETF Trust.

Investor Participation Methods and Costs

Under the proposed structure, investors will purchase shares of the tokenized category at net value through the fund's normal subscription process. These shares do not charge sales commissions and can be distributed by registered broker-dealers or directly through the fund's transfer agent. Specific costs associated with this category will be borne by its holder. The document identifies potential transaction costs associated with share sales, buybacks and dividend distributions.

The application will amend ARK's November 2025 exemption order, which allows the fund to maintain multiple share classes. The previous application included a statement that fund shares would neither be listed on a stock exchange nor quoted through a quote medium, and therefore required a return to the SEC for filing before introducing the proposed trading arrangement.

No blockchain or tokenization provider is specified

No specific blockchain, tokenization provider or new transfer agent is specified in the application document. When discussing the fees associated with this proposed category, the document makes general reference to "tokenization agents" and transfer agents of funds.

According to the fund's semi-annual report, Bank of New York Mellon currently serves as the transfer agent, administrator and custodian of the ARK Venture Fund.

Through this venture fund, ARK has established a financial connection with tokenization company Securitize. The portfolio holds equity in Securitize and a convertible note with a face value of US$10 million and a 5% interest rate that will mature in September 2028. The fund acquired the note on September 30, 2025.

This year, Securitize expanded its institutional tokenization business. In August, the company partnered with Neuberger to launch a tokenized high-yield fund that mainly invests in high-yield bonds while also offering interests on multiple networks including Avalanche, Ethereum, Solana and Sui. In addition, Securitize serves as transfer agent and tokenization platform for BlackRock BUIDL funds and continues to expand its infrastructure into more institutional products. ARK has maintained exposure to Securitize as its tokenization business expands. In July, Hanwha Group became its largest shareholder, with a stake of 9.6%.

However, ARK's application did not state whether Securitize would play a role in this proposed tokenization category.

SEC tokenization rules still under development

At the time of the filing, the SEC had not yet completed a separate regulatory framework for trading in tokenized securities. The innovation exemption discussed by SEC Chairman Paul Atkins has not yet taken effect. The proposed approach is expected to allow eligible companies to test blockchain-based securities products under established conditions, while establishing permanent rules.

It has been previously reported that the SEC is preparing a regulatory path that may allow qualified platforms to trade tokenized U.S. stocks around the clock in August. Existing federal securities rules will still apply while the exemption is not completed. However, progress on exemptions faces delays. Legal issues about the SEC's powers and concerns from traditional market participants have delayed a framework originally scheduled to be launched in August, focusing on how blockchain-based transactions interact with existing securities market regulatory rules.

In addition, Atkins submitted a proposal for the Regulation Crypto Assets on August 18. The proposal addresses the issue of exemptions for issuers of crypto assets, but does not establish rules specifically for the category of tokenized investment fund shares. The deadline for soliciting public opinions on the proposal is October 20.

As a result, ARK's application relies on the existing Investment Company Act process rather than waiting for outstanding innovation exemptions to take effect.

SEC is rewriting transfer agent rules involving blockchain records

Regulators are separately reviewing the infrastructure that maintains official securities ownership records. On September 1, the SEC proposed a comprehensive transfer agent reform plan covering registration, record keeping, transfer processing and asset custody. This is the first time in about four decades that the agency has significantly rewritten the rules governing registered transfer agents.

This proposal specifically addresses the use of blockchain technology in securities issuance and share transfers. Transfer agents using digital records will face requirements related to record-keeping systems, network security, business continuity and the use of external technical service providers.

Meanwhile, companies are testing ways to connect blockchain settlements to regulated shareholder records. Effective had said in July that it had sought registration with an SEC transfer agent to maintain ownership records of tokenized securities on the blockchain infrastructure, although no public SEC documents supporting the registration statement were found at the time.

The deadline for comments on the SEC's proposed transfer agent reform is November 3. ARK's tokenization category applications have a separate September 18 deadline for hearing requests, after which the committee can issue orders for the exemption relief requested.