SEC Rejects ARK 21Shares Bitcoin ETF Listing Again

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The SEC has again rejected a proposed listing of the ETF ARK 21 Shares Bitcoin on the Cboe BZX stock exchange, according to the January 26 statement from the SEC. The SEC rejected a similar proposal in April 2022.

The SEC just now rejected the listing of ARK and 21Shares spot bitcoin again, $BTC ETF.

unusual_whales (@unusual_whales) January 26, 2023

The proposed ETF would have been jointly managed by Cathie Woods Ark Investment Management and 21Shares if approved. The purpose of the proposed fund was to provide investors with exposure to the price of Bitcoins within the bounds of the regulated stock market.

The Cboe BZX Exchange originally applied for the ETF’s listing in June 2021. After the first application was rejected in 2022, it reapplied and presented new legal arguments to try to get the fund approved.

In its second application in May 2022, the Cboe BZX Equities Exchange argued that it has a comprehensive surveillance sharing agreement with a sizable regulated market that can prevent price manipulation. The ARK 21Shares Bitcoin ETF should therefore be allowed to be listed on an exchange. According to the app, this oversight sharing agreement is with the Chicago Mercantile Exchange (CME), where Bitcoin futures contracts are traded.

The request also argued that most currency and commodity spot markets are unregulated, but that generally does not mean that a request will be rejected for that reason alone.

Related: SEC’s one-dimensional approach slows progress: Grayscale CEO

In its response, the SEC rejected these arguments. He said the surveillance sharing agreement between Cboe BZX Equities Exchange and the CME does not apply to spot Bitcoin, since only Bitcoin futures contracts are traded at the CME.

The SEC also asserted that it is not always necessary to have a surveillance sharing agreement, but if such an agreement does not exist, then the exchange must establish that other means to prevent the acts and fraudulent and manipulative practices will suffice. He said the exchange has not demonstrated this point, so he does not allow the ETF to be listed.

The SEC has so far not approved any spot Bitcoin ETFs for listing. Grayscale Investment Trust is seeking to convert its Bitcoin Trust into a spot Bitcoin ETF, and it has sued the SEC for rejecting its proposal. Oral arguments are due to be heard for the Grayscale case in March 2023.

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