Crypto Investors Can Now Buy a Cathie Wood Investment Fund That Holds SpaceX and OpenAI. Here's What You Need to Know to Get Started.

Eligible U.S. investors can now buy Cathie Wood’s ARK Venture Fund (ARKVX +0.00%) as a token on the Ethereum (ETH +0.27%) blockchain, Space Exploration Technologies was the fund’s top holding, with a weight of 7.1%, ahead of the prediction market Kalshi at 5.8%, OpenAI at 5.4%, and Anthropic at 4.1%.

Does it even make sense to buy a token that effectively brings a rocket company and two artificial intelligence labs to your crypto wallet? Let’s walk through how this fund works to start.

This fund’s token isn’t freely tradable for everyone

Cathie Wood’s Ark Invest and the tokenization company Securitize announced the ARKVX tokens on Sept. 24.

The only eligible buyers are those with a verified Securitize account, with an approved crypto wallet, and at least $500 of the stablecoin USDC. There’s a 2% transaction fee associated with buying the token, too — and for the record, that’s a fairly hefty fee.

On top of its transaction fee, ARKVX also charges a total of 2.9% a year in net expenses, nearly 4 times the 0.75% charged by the ARK Innovation ETF. So this asset is quite expensive to enter and hold.

Each ARKVX token represents an ordinary ARKVX share that Securitize holds for you. It’s structured as a closed-end interval fund, unlike an exchange-traded fund (ETF), which you can sell whenever the market is open.

Ethereum is just being used as the record book here. Ark says ARKVX shares aren’t listed anywhere and can be redeemed only through quarterly repurchase offers; token holders can also transfer to other Securitize-verified investors. Those quarterly repurchase offers are capped at 5% of the fund’s shares outstanding, and they can be prorated, so it’s possible that you may get only part of your money out if you want to sell. It goes without saying that’s a far cry from the ETFs that made Cathie Wood’s Ark Invest famous, which you can sell any time the market is open.

The tax implications for investors differ somewhat as well.

If you swap Ether into USDC to buy ARKVX, the IRS Taxpayer Advocate Service says exchanging one digital asset for another will create a capital gain or loss. If you already hold appreciated crypto, converting it to fund this purchase will likely trigger a taxable gain either way. And since repurchases happen quarterly, you can’t sell your holdings to harvest a tax loss whenever you like, so be sure to plan ahead if you decide to invest.

Is this fund worth buying?

Most investors probably don’t need the token version of this fund, as Ark says that retail investors can already buy ARKVX shares through conventional investing platforms, no crypto wallet required.

It’s the private stakes in OpenAI and Anthropic that are the draw to the fund, and they’re also the biggest risk. Without public prices for those holdings, the fund’s net asset value is dependent on estimates. After the companies do their initial public offerings (IPOs), there’s a price discovery process that tests the estimates against real demand from the market, and it’s possible the results will come in below the values the fund currently carries those stakes at.

On the other hand, it’s also possible that the Anthropic and OpenAI IPOs, whenever they occur, will be smash hits that top all the estimates. But that argues for waiting for those companies to list and buying their shares directly, rather than buying the Ark token, which is a very pricey and inefficient approach to accomplishing the same goal.

For most investors, buying the token instead of ETF shares, or instead of waiting for those listings, just adds fees and friction without adding much in the way of access.