SEC rejects application for ARK 21Shares spot Bitcoin ETF

The U.S. Securities and Exchange Commission, or SEC, has officially rejected the application for the ARK 21Shares Bitcoin exchange-traded fund.

In a Thursday filing, the SEC disapproved a proposed rule change of the Chicago Board Options Exchange, or Cboe, BZX Exchange to list and trade shares of the ARK 21Shares Bitcoin (BTC) ETF. The SEC said the proposed rule change, originally published for comment in the Federal Register in August 2021, would not be “”designed to prevent fraudulent and manipulative acts and practices,” nor “protect investors and the public interest.”

The SEC said the Cboe BZX Exchange failed to meet the requirements to list a financial product under its rules of practice and those of the Exchange Act. Under these restrictions, exchanges wishing to list a Bitcoin ETF must “have a comprehensive supervisory-sharing agreement with a regulated market of significant size regarding the underlying or reference Bitcoin assets.”

21Shares, a European-based exchange-traded product publisher, submitted the spot Bitcoin ETF application to Ark Investment Management in June 2021 for listing on the Cboe BZX Exchange under the ticker ARKB. The SEC had 180 days to reach a decision or make the offer public for comment. In January 2022, the regulatory body extended its deliberation period until April.

To date, the SEC has not approved a single spot crypto ETF filing for listing in the United States, but has given the green light to investment vehicles tied to BTC futures, including offerings from ProShares, VanEck, and Valkyrie. From October 2021, 21Share used to be one of the largest institutional publishers of crypto products, with over $2 billion in assets under management reported.

Related: SEC Could Approve Spot Bitcoin ETFs As early as 2023

Grayscale, one of the next asset managers likely to hear a decision from the on-site regulatory authority Bitcoin ETF, launched a campaign in February to encourage US investors to file comments with the SEC. The regulator is expected to make a decision by July 6 on Grayscale to convert its Bitcoin Trust into a spot BTC ETF.

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