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SEC Denies ARK 21Shares Spot Bitcoin ETF Application

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The United States Securities and Exchange Commission, or SEC, has officially denied the application for the ARK 21Shares Bitcoin Exchange Traded Fund (ETF).

In a filing Thursday, the SEC rejected a proposed rule change by the Chicago Board Options Exchange, or Cboe, BZX Exchange, regarding the listing and trading of shares in the ARK 21Shares Bitcoin (BTC) ETF. The SEC said the proposed rule change, originally released for comment in the Federal Register in August 2021, was not “to prevent fraudulent and manipulative acts and practices” nor “to protect investors and the public interest.”

The SEC said that the Cboe BZX Exchange failed to meet the requirements for listing a financial product under its rules of procedure as well as those of the Exchange Act. Under these restrictions, exchanges wishing to list a bitcoin ETF must have “a comprehensive watch-sharing agreement with a regulated market of significant size in relation to the underlying or reference bitcoin assets.”

21Shares, a Europe-based issuer of exchange-traded products, 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 make a decision or open the offering to public comment. In January 2022, the regulator extended its advisory window to April.

To date, the SEC has not approved a spot crypto ETF application for stock listings in the United States, but has given the green light to investment vehicles linked to BTC futures, including offerings from ProShares, VanEck, and Valkyrie. As of October 2021, 21Shares was one of the largest institutional issuers of crypto products with more than $2 billion in reported assets under management.

Related: The SEC could approve spot bitcoin ETFs as early as 2023

Grayscale, one of the next money managers likely to hear a regulator’s decision on its Spot Bitcoin ETF, launched a campaign in February aimed at encouraging U.S. investors to file comments with the SEC. The regulator is expected to make a decision by July 6 on Grayscale converting its Bitcoin Trust into a spot BTC ETF.