United States SEC Rejects Spot ETF Listing for ARK 21Shares

For the second time in a row, the United States regulator the Securities and Exchange Commission has denied ARK Investment Management and 21Shares approval for their spot Bitcoin (BTC) Exchange Traded Fund (ETF).

The regulator has stated that the Cathie Wood-led ARK does not meet the criteria for offering such options nor does the exchange (Cboe BZX Exchange) where the ETF will be listed on.

“An exchange that lists bitcoin-based ETPs can meet its obligations under Exchange Act Section 6(b)(5) by demonstrating that the exchange has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets,” the SEC quoted. “The commission concludes that BZX has not met its burden under the Exchange Act.”

ARK and 21Shares Request SEC Approval

ARK Investment Management first partnered with the exclusive Exchange-Traded Products or ETPs provider 21Shares over an ETF in 2021.

Together, they filed an application with the SEC with the expectation that once it is approved, ARK will be charged with providing marketing support for the ETF while 21Shares will act as the sub-advisor. 

The ETF which was named ARK 21Shares Bitcoin Futures Strategy ETF with the ticker symbol ARKA was meant to be listed on Cboe BZX Exchange. However, they were forced back to their drawing board after the SEC rejected their application. 

The U.S. SEC pointed out that the ETF is not “designed to prevent fraudulent and manipulative acts and practices nor protect investors and the public interest.”

Grayscale Sues SEC For ETF Rejection

It is worthy of note that such rejection to list a spot BTC ETF is not peculiar to ARK or 21Shares.

Notably, the SEC has not approved any application similar to this in so many years while always stating the volatility of the market and other price manipulation concerns. Grayscale faced a similar fate with the regulator, after a very long delay, its request was rejected.

Unlike others who quietly accepted the decision of the SEC, Grayscale with support from American cryptocurrency exchange Coinbase filed an appeal with the  Court of Appeals for the District of Columbia Circuit against the rejection decision of the SEC. It has submitted its first legal brief against the regulator.