The SEC Refused Another Spot Bitcoin ETF Bid By ARK Invest And 21Shares

On the 26th of January, SEC, also known as the Securities and Exchange Commission, rejected a bid to allow a Bitcoin spot ETF to launch in the United States. This latest proposal came from Cathie Wood’s investment house Ark Invest and global crypto ETF provider 21Shares. They both joined a second time to launch the ARK 21Shares Bitcoin ETF. This proposal of Spot Bitcoin ETF was initially filed last year on the 13th of May. A month before this filing, the attempt by Ark Invest to list the product on BZX was turned down.

ETF, also known as an exchange-traded fund, is basically an investment vehicle that offers indirect exposure to an underlying asset. ETF can be very useful for investing in items that are difficult to by oneself, such as cryptocurrencies. The reason behind rejecting the proposal is the same as the previous one. According to the SEC, Ark Invest failed to demonstrate that the rules of its exchange are adequate to protect the investing public from manipulative and fraudulent acts and practices.

In its rejection of this proposal, the SEC wrote that an exchange that lists bitcoin-based ETPs could fulfill its obligations under Exchange Act Section 6(b)(5) by demonstrating that the exchange has a complete surveillance-sharing agreement with a regulated market of significant size related to the reference or underlying bitcoin assets. If the SEC had approved this proposal, both institutions would have a green light to buy Bitcoin when they are barred from doing so by internal charter. 

On the contrary, the SEC permitted multiple futures Bitcoin ETFs to launch starting in October 2021. The ProShares Bitcoin Strategy ETF had one of the most active opening days in NYSE history. The reason behind backing future ETFs is that they’re supported by Bitcoin futures contracts, which promise to buy Bitcoin for a set price at a later date.

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