The US Securities and Exchange Commission (SEC) has again rejected a proposal to list the ARK 21 Shares Bitcoin ETF on the stock exchange Cboe BZX on the 26th. The SEC also rejected a similar proposal in April 2022.
The SEC has just now once again rejected ARK’s and 21Shares spot bitcoin, $BTC ETF listing.
— unusual_whales (@unusual_whales) January 26, 2023
If approved, it would have been jointly managed by Kathy Wood’s Ark Investment Management and 21Shares. The purpose of the proposed fund was to allow investors to gain exposure to Bitcoin prices within the regulated stock market.
The Cboe BZX exchange originally requested the listing of the ETF in June 2021. After its initial application was rejected in 2022, it reapplied to make new legal claims and seek approval for the fund.
In its second filing, filed in May 2022, Cboe BZX claimed to have entered into “comprehensive monitoring sharing agreements with regulated markets of substantial size” that could prevent price manipulation. Therefore, the ARK 21Shares Bitcoin ETF should be allowed to be listed on the exchange. The surveillance sharing agreement is with the Chicago Mercantile Exchange (CME), where bitcoin futures are traded, according to the filing.
The application also argues that while spot markets for most currencies and commodities are unregulated, applications are generally not rejected for that reason alone.
In its response, the SEC denied these arguments. The monitoring sharing agreement between Cboe BZX and CME does not apply to physical bitcoin, as only bitcoin futures are traded on CME.
The SEC also noted that while it is not necessary to enter into a monitoring sharing agreement, even in the absence of such an agreement, an exchange may “take other measures to prevent fraudulent and manipulative conduct and practices.” We have to prove that it is sufficient,” he said. Since the exchange has not demonstrated this point, it will not allow the ETF to be listed.
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