SEC rejects ARK 21Shares spot Bitcoin ETF application

The United States Securities and Exchange Commission (SEC) has officially disapproved the application to the ARK 21Shares bitcoin exchange-traded fund.

The SEC rejected a rule change proposed by the Chicago Board Options Exchange (or Cboe), to allow traders and shareholders of the ARK 21Shares Bitcoin ETF to list and trade. According to the SEC, the rule change proposed by the Chicago Board Options Exchange (or Cboe, BZX Exchange) was not intended to “prevent fraudulent and manipulative acts or practices” nor protect investors and the public interest.

According to the SEC, the Cboe BZX Exchange failed to meet the requirements for listing a financial product according to its rules of practice and the Exchange Act. These restrictions require that exchanges seeking to list Bitcoin ETFs must have a “comprehensive surveillance-sharing arrangement with a regulated marketplace of significant size” regarding the reference or underlying Bitcoin assets.

21Shares, an exchange-traded product provider based in Europe, filed the spot Bitcoin ETF application to Ark Investment Management in June 2021. The application was for listing on Cboe BZX Exchange, under the ticker ARKB. The SEC had 180 days for a decision or to open the public comment. The regulatory body extended its deliberation window from January 2022 to April.

The SEC has yet to approve any spot crypto ETF applications for listing shares in the United States. However, it has granted the green light to investment vehicles that are linked to BTC futures. This includes offerings from ProShares and VanEck. 21Shares had more than $2B in assets under management as of October 2021.

Related: SEC could approve spot Bitcoin ETFs by 2023

Grayscale, which is one of the next asset managers to receive a decision by the regulatory body regarding its spot Bitcoin ETF has launched a campaign in February to encourage U.S investors to make comments to the SEC. Grayscale’s conversion of its Bitcoin Trust to a spot BTC exchange traded fund is expected to be decided by the regulator by July 6.