• The United States Securities and Exchange Commission (SEC) has rejected the joint effort of Ark Investment Management and 21Shares to list a spot Bitcoin ETF on the Cboe BZX Exchange.
• The product was supposed to be listed on the CBOE BZH Exchange, however, the SEC claimed the venue did not „demonstrate that its proposal is consistent with the requirements“ to prevent manipulation of prices and fraud.
• The application was filed by Ark Investment Management and 21Shares in the spring of 2022.
The United States Securities and Exchange Commission (SEC) recently announced their decision to reject the joint effort of Ark Investment Management and 21Shares to list a spot Bitcoin ETF on the Cboe BZX Exchange. The proposed product was intended to be listed on the CBOE BZH Exchange, however, the SEC claimed the venue did not „demonstrate that its proposal is consistent with the requirements“ to prevent manipulation of prices and fraud.
This is the second time the regulator has rejected the application filed by Ark Investment Management and 21Shares in the spring of 2022. This proposal was an attempt to create a Bitcoin-related exchange-traded fund that would be available to the public. The ETF would allow investors to purchase shares in the fund and gain exposure to the crypto asset.
The SEC has been very cautious in approving any crypto-related products due to the potential for fraud and manipulation. They have also been wary of allowing any products that could be considered securities to be traded publicly, as they could be used to launder money or facilitate other illegal activities.
The rejection of the proposed ETF is a blow to the crypto industry and those who hoped for easier access to the digital asset. It is yet another example of the SEC’s rigorous approach to approving products related to the crypto asset class.
Ark Investment Management and 21Shares did not comment on the rejection, but it is likely that they will continue to pursue the listing of their product. It is possible that the SEC may reconsider their decision if the applicants can prove that their product meets the requirements for preventing fraud and manipulation.
In the meantime, investors will have to look elsewhere for exposure to Bitcoin. As the industry continues to mature, more products may become available that will provide investors with easier access to the crypto asset. Until then, investors may need to rely on other methods such as derivative contracts and futures to gain exposure to the asset class.