A fund you can exit four times a year just got a tokenized share class

The SEC has granted ARK Venture Fund amended exemptive relief under the Investment Company Act, clearing the way for two new share classes: an Exchange Class meant for listing on a national securities exchange, and a Tokenized Class whose ownership records can be kept on a distributed ledger and traded through alternative trading systems. The document is Release No. IC-36333, and what it permits is more interesting than what it announces.

Start with what the fund is, because that is where the tension sits. ARK Venture Fund is a closed-end interval fund: shares are not redeemable on demand, and holders exit through periodic repurchase offers. Its own prospectus sets the terms:

• Today: repurchase offers four times a year, in March, June, September and December, for a minimum of 5% of shares.
• At that minimum the fund buys back 20% of itself a year, so a full turnover through the window takes five years.
• An exchange-listed class would trade on roughly 252 days a year, which is 63 times more chances to leave.

Nothing in the SEC order changes what the fund owns. It holds private companies, which do not become liquid because a share class is recorded on a blockchain instead of in a transfer agent's book. What the order permits is a second and third way to hold the same illiquid portfolio, one of them trading continuously. The liquidity of the wrapper and the liquidity of the assets are about to be allowed to diverge, and that divergence is the whole experiment.

“That makes this a regulatory infrastructure story rather than a product-launch story.”

— NewsBTC, News desk, edited by Samuel Rae

NewsBTC, on what the order actually is

That line deserves repeating because the headline invites the opposite reading. Exemptive relief is permission to depart from default rules, granted to the applicants named in the order. It is not a rule change for the industry, it does not apply to other fund managers, and ARK has not said the tokenized shares are trading or set a launch date. A structure has been approved. Nothing has been sold.

Who is being handed this

The reason it still matters is the direction of travel. Tokenized funds have mostly lived in bespoke private-market vehicles aimed at qualified investors. This one sits inside the Investment Company Act, in a fund with a $500 minimum and no accreditation requirement, which is a very different set of people to hand a continuously traded claim on private assets.

Access is widening, price is not

Put it next to the rest of the month and the pattern is a widening of access rather than of supply. The SEC opened a path for tokenized stocks a week ago, X added a Trade button routing retail orders from a timeline, and here a registered fund gets permission to put a share class on a ledger. Meanwhile a company seeking an ordinary $1bn listing just suspended the attempt. Getting in is becoming easier in several directions at once. Getting a price is not.

Informational material, not investment advice. The SEC order grants permission to the named applicants and is not a rule change for the industry; neither share class has been announced as trading. Fund terms are from the fund's own filings.