The Securities and Exchange Commission (SEC) has rejected a proposal to list the ARK 21Shares Bitcoin ETF on the Cboe BZX equities exchange, according to a Jan. 26 statement from the SEC.
Cboe BZX Equities Exchange argues for comprehensive surveillance agreement with CME
This marks the second time the SEC has rejected this proposal, after previously doing so in April 2022. The proposed ETF would have been managed jointly by Cathie Wood’s Ark Investment Management and 21Shares.
The Cboe BZX Exchange had first asked to list the ETF in June 2021. After its initial rejection in 2022, the exchange reapplied and made new legal arguments in an attempt to get the fund approved. The exchange argued that it had a “comprehensive surveillance-sharing agreement with a regulated market of significant size” with the Chicago Mercantile Exchange (CME) that would prevent price manipulation. However, the SEC rejected these arguments, stating that the surveillance agreement only applies to Bitcoin futures contracts and not spot Bitcoin.
SEC continues to reject spot Bitcoin ETF listings
The SEC has yet to approve any spot Bitcoin ETF to be listed on an exchange. Grayscale Investment Trust is currently seeking to convert its Bitcoin Trust into a spot Bitcoin ETF and has sued the SEC for rejecting its proposal. Oral arguments for the Grayscale case are scheduled to be heard in March 2023.
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FAQ
The ARK 21Shares Bitcoin ETF is a proposed exchange-traded fund that would have been jointly managed by Ark Investment Management and 21Shares, and would have allowed investors to gain exposure to the price of Bitcoin within the regulated stock market.
The SEC rejected the listing of the ARK 21Shares Bitcoin ETF because the Cboe BZX Equities Exchange, which had originally asked to list the ETF, had not demonstrated that other means to prevent fraudulent and manipulative acts and practices would be sufficient in the absence of a surveillance sharing agreement.
The Cboe BZX Equities Exchange argued that it had a “comprehensive surveillance-sharing agreement with a regulated market of significant size” with the Chicago Mercantile Exchange (CME) that would prevent price manipulation.
The SEC has not yet approved any spot Bitcoin ETF to be listed on an exchange.
Grayscale Investment Trust is currently seeking to convert its Bitcoin Trust into a spot Bitcoin ETF and has sued the SEC for rejecting its proposal. Oral arguments for the Grayscale case are scheduled to be heard in March 2023.
