Author: Jae, PANews
On September 8, Andy, founder of The Rollup, revealed that a major fund has received SEC approval to tokenize its shares on-chain.
Coincidentally, the SEC’s latest regulatory filing shows that ARK is applying to amend its exemption order. If approved, it would become the first major U.S. asset manager to list tokenized securities under a case-by-case exemption.
This move reflects the nuanced evolution of U.S. digital asset regulation: the SEC’s broad “innovation exemption” framework for tokenized securities is still under development, while case-by-case exemptions allow leading institutions to pilot the space. Previously, asset managers entering the RWA space primarily issued on-chain tokenized assets; now, they are beginning to directly transform their managed fund shares into on-chain, registrable, and transferable tokenized securities.
The integration of traditional capital markets with on-chain markets is approaching a new tipping point.
ARK applies for a case-by-case exemption to tokenize its fund shares.
This market development is not without basis. According to an official document released by the SEC on August 24, ARK Venture Fund and ARK Investment Management formally applied to amend their previous exemption order.
Last year, ARK already obtained the relevant SEC exemption allowing it to adopt a multi-class share structure; however, at that time, the shares were neither listed on an exchange nor planned to develop a secondary market.
The main upgrades in this application are the addition of two new share classes: an “Exchange Class” that can be listed on national securities exchanges, and a “Tokenized Class” that records ownership using distributed ledger technology (DLT)—this is a key focus of the application.
Designed according to the application documents, tokenized shares can be traded through a regulated alternative trading system (ATS), transferred via other quotation mechanisms, and also transferred peer-to-peer between eligible wallets.
However, free transferability is contingent upon strict compliance: the fund and its transfer agent must perform KYC/AML (Know Your Customer/Anti-Money Laundering) verification on wallets holding tokenized shares; only wallets approved on the whitelist are permitted to hold the associated assets.
In fact, this design is building a “regulated on-chain securities market”: integrating the legal rights, transfer registration, and compliance reviews of traditional funds with blockchain-based account systems and settlement capabilities.
It is important to note that tokenized shares are fundamentally still traditional fund shares and fall within the category of securities. Blockchain primarily serves as infrastructure for recording and transferring ownership. The SEC has previously made clear: tokenization itself does not alter the legal nature of a security.
In theory, these on-chain fund shares could later be integrated with stablecoins, lending protocols, and other on-chain financial products to create financial combinations that are difficult to achieve in traditional markets.
However, risks also exist: traditional funds allow subscriptions and redemptions based on daily net asset value (NAV), whereas tokenized shares traded on secondary markets may trade at prices that deviate from the fund’s NAV. ARK also stated in its filing that trading prices on exchanges, ATSs, or peer-to-peer platforms may differ from the fund’s NAV.
It should be emphasized that ARK’s case-specific exemption application is still under regulatory review and is not the same mechanism as the broader, proposed exemption by the SEC. SEC filings indicate that stakeholders may request a hearing until September 18. If the SEC does not hold a hearing, it typically announces the application outcome or next steps shortly thereafter.
From investing in tokenization service providers to ARK stepping in directly
If the application is approved and ARK successfully paves the way, the entire traditional asset management industry will gain a standardized reference pathway.
ARK Venture Fund is a continuously offered closed-end interval fund managed by Cathie Wood, established in 2022. It champions the democratization of venture capital, with a minimum investment threshold of just $500 for retail investors. The fund’s portfolio is concentrated in leading private unicorns across the global technology sector, including OpenAI, Anthropic, Figure AI, startup chipmaker Tenstorrent, and SpaceX prior to its public listing.
However, constrained by the traditional interval fund structure, investors cannot freely transfer or exit on a daily basis and must rely on the fund’s quarterly fixed repurchase quota of 5% to liquidate their holdings proportionally, creating a clear mismatch between the asset liquidity cycle and the high turnover demands of technology equity investments. ARK’s application may be aimed at addressing this very pain point.
More importantly, ARK has long been a deep participant in tokenized infrastructure. Last year, the ARK Venture Fund invested approximately $10 million in Securitize, an RWA infrastructure platform that now provides tokenization services to leading asset management firms such as BlackRock, Apollo, and Hamilton Lane.
From investing in tokenization service providers to applying for the tokenization of fund shares, ARK’s actions reflect a consistent extension of its value chain: from building on-chain infrastructure to personally launching product pilots.
This is also why ARK’s application has attracted attention. It signifies that traditional asset management firms’ participation in on-chain activities is transitioning from the 1.0 phase of issuing on-chain assets to the 2.0 phase of tokenizing fund shares. In the past, asset managers entering the crypto space primarily issued tokenized assets; in the future, they will be able to turn the funds they manage into on-chain, tradable, and composable assets.
The three-step journey to asset management on-chain: The true watershed moment is still ahead.
This year, SEC Chairman Paul Atkins has repeatedly stated the need to establish a more suitable regulatory framework for blockchain transactions.
In March, he stated that the SEC was considering introducing an innovation exemption to facilitate limited trading of certain tokenized securities, with clear time and scope limitations, to gain practical experience before establishing long-term rules. In April, he further indicated that the innovation exemption mechanism was nearing launch.
However, this process did not unfold as the market expected. The previously planned announcements were postponed after the SEC canceled its scheduled meeting on August 14.
Brett Redfearn, CEO of Securitize, noted that a key reason for the delay is regulators' concerns that related policies could impact the legislative momentum of Congress’s Clear Act. The innovation exemption is likely to be implemented only after progress is made on the relevant legislation, with a potential window opening around early October.
However, from a longer-term evolutionary perspective, the on-chain migration of traditional U.S. asset management industries follows a three-stage process.
The first phase is the product validation stage. Tokenized fund products such as BlackRock’s BUIDL and Franklin Templeton’s BENJI have demonstrated that, under the existing securities regulatory framework, fund products can be successfully tokenized, with on-chain shares possessing both legal grounding and operational feasibility.
Phase two is the pilot case period. ARK’s application represents the latest development along this path. Through case-by-case exemptions, the SEC allows asset managers like ARK to explore broader on-chain share trading, testing real-world issues such as secondary market liquidity, peer-to-peer transfers, and compliance boundaries, thereby accumulating experience for broader regulatory rules.
The third stage is the implementation phase. If the future innovation exemption is officially launched, more tokenized securities will enter the on-chain market within restricted limits, and major asset management firms such as Fidelity, WisdomTree, and BlackRock are likely to follow suit by expanding their tokenized fund product lines.
Of course, all scenarios involve variables: whether ARK's application will be approved, whether congressional legislation will advance, and when innovation exemptions will be implemented—each step carries uncertainty.
Trends are gradually emerging: after assets are tokenized, the next step is the tokenization of shares. The true industry watershed may only begin after the tokenization of shares.