Author: Jae, PANews
On September 8th, Andy, founder of The Rollup, revealed that a large fund has received a "green light" from the SEC, allowing its fund shares to be tokenized and put on-chain.
Coincidentally, the SEC's latest regulatory filing shows that ARK is applying for an amendment to its exemptive order. If approved, it would become the first major US asset management firm to launch tokenized securities based on a case-specific exemption.
This move reflects a subtle evolution in US digital asset regulation: the SEC's universal "innovation relief" framework for tokenized securities is still "unfinished," while case-specific exemptions leave an opening for pilot projects by leading institutions. Previously, asset managers entering the RWA space mostly issued on-chain tokenized assets; now, they are beginning to directly turn the shares of the funds they manage into tokenized securities that can be registered and transferred on-chain.
The fusion of traditional capital markets and on-chain markets is approaching a new critical point.
ARK Applies for Case-Specific Exemption to Move Fund Shares On-Chain
This market movement is not unfounded. According to official documents released by the SEC on August 24th, ARK Venture Fund and ARK Investment Management formally applied to amend their previous exemptive order.
As early as last year, ARK had already received a relevant exemption from the SEC, allowing it to adopt a Multi-Class Fund Share Structure. However, in the initial design, the shares were neither listed on exchanges nor planned to form a secondary trading market.
The main upgrade in this application is the addition of two major share classes: one is an "Exchange Class" that can be listed on a national securities exchange; the other is a "Tokenized Class" that uses Distributed Ledger Technology (DLT) to record ownership, which is the key item in the application.
According to the application design, tokenized shares can be traded both through regulated Alternative Trading Systems (ATS) and via other quotation mechanisms, and are also allowed for peer-to-peer transfers between eligible wallets.
However, the prerequisite for free circulation is strict compliance: the fund and its Transfer Agent must complete KYC/AML (Know Your Customer/Anti-Money Laundering) verification on wallets holding tokenized shares. Only wallets approved and whitelisted are permitted to hold the relevant assets.
In essence, this design is building a "regulated on-chain securities market": connecting the legal rights, transfer registration, and compliance checks of traditional funds with the account system and settlement capabilities of the blockchain.
It's important to clarify that tokenized shares are fundamentally still traditional fund shares, falling under the category of securities. Here, the blockchain primarily serves as infrastructure for functions like ownership recording and transfer. The SEC has previously emphasized that tokenization itself does not change the legal nature of a security.
In theory, such on-chain fund shares could in the future be integrated with stablecoins, lending protocols, and other on-chain financial products, creating financial combinations difficult to achieve in traditional markets.
However, risks also exist: traditional funds are redeemed at the daily net asset value (NAV), while tokenized shares, when traded on secondary markets, may trade at prices deviating from the fund's NAV. ARK also states in its application document that transaction prices on exchanges, ATS, or in peer-to-peer trades may differ from the fund's net asset value.
It must be emphasized that ARK's application for a case-specific exemption is still under regulatory review and is not the same mechanism as the universal innovation relief being planned by the SEC. SEC documents show that interested parties can request a hearing before September 18th. If the SEC does not hold a hearing, it typically announces the application result or next steps shortly thereafter.
From Investing in Tokenization Service Providers to ARK's Direct Involvement
If the application is approved and ARK successfully navigates the path, the entire traditional asset management industry will gain a standardized reference route.
ARK Venture Fund is a continuously offered closed-end Interval Fund under Cathie Wood's ARK, established in 2022. It advocates for "democratizing venture capital," with a subscription threshold of only $500 for ordinary investors. Its portfolio is concentrated in some of the world's most significant private tech unicorns, including OpenAI, Anthropic, Figure AI, chip startup Tenstorrent, and SpaceX before its potential IPO.
However, constrained by the traditional interval fund structure, investors cannot freely transfer or exit on a daily basis. They must rely on the fund's quarterly open periods offering a fixed 5% repurchase quota for proportional liquidation. This liquidity cycle is clearly mismatched with the high turnover demand typical of tech equity investments. ARK's application may be aimed precisely at resolving this pain point.
More critically, ARK is already a deep participant in tokenization infrastructure. Last year, ARK Venture Fund invested approximately $10 million in the RWA infrastructure platform Securitize, which currently provides tokenization services for leading asset managers like BlackRock, Apollo, and Hamilton Lane.
From investing in a tokenization service provider to applying to tokenize its own fund shares, ARK's actions represent a consistent extension of its strategy: from building on-chain infrastructure to personally piloting products.
This is also why ARK's application has drawn attention. It signifies that the approach of traditional asset managers participating on-chain is transitioning from the 1.0 stage of "issuing on-chain assets" to the 2.0 stage of "putting fund shares on-chain." In the past, asset managers entering crypto mainly issued tokenized assets; in the future, they may be able to turn the funds they manage themselves into on-chain assets that are transferable and composable.
Asset Management On-Chain in Three Stages: The True Watershed Still Lies Ahead
This year, SEC Chairman Paul Atkins has stated multiple times the intent to establish a more suitable new regulatory framework for blockchain-based trading.
In March, he mentioned that the SEC was considering introducing an innovation relief to facilitate limited trading of certain tokenized securities, with clear time and scope limits to gain practical experience before forming long-term rules. In April, he further indicated that the innovation relief mechanism was close to being launched.
However, this process has not materialized as the market expected. The originally planned announcement was postponed after the SEC canceled its scheduled meeting on August 14th.
Securitize President Brett Redfearn pointed out that an important reason for the delay is regulatory concern that the policy might affect the progress of the congressional "Clarity Act." The innovation relief will likely need to wait until related legislation makes progress before landing, with a potential timeframe around early October.
Nevertheless, from a longer-term evolutionary perspective, the on-chain migration of the US traditional asset management industry appears to be unfolding in "three stages."
The first stage is the product validation period. Represented by tokenized fund products like BlackRock's BUIDL and Franklin Templeton's BENJI, this stage proved that within the current securities regulatory framework, fund products can undergo tokenization, and on-chain shares possess legal foundations and practical feasibility.
The second stage is the case-specific pilot period. ARK's application is the latest development on this front. Through case-specific exemptions, the SEC allows asset managers like ARK to explore broader on-chain share trading, testing practical issues like secondary market circulation, peer-to-peer transfers, and compliance boundaries, thereby accumulating experience for universal rules.
The third stage is the framework implementation period. If the innovation relief is officially launched in the future, more tokenized securities will enter the on-chain market within limited scopes, and leading asset managers like Fidelity, WisdomTree, and likely BlackRock will probably expand their tokenized fund product lines.
Of course, variables exist in all scenarios: whether ARK's application is approved, whether congressional legislation progresses, and when the innovation relief lands—each step carries uncertainty.
The trend is gradually becoming clear: after assets go on-chain, shares will follow. The true industry watershed will likely only commence after "shares go on-chain."
