US SEC says ARK and 21Shares ETF was not "consistent with the requirements."
US Securities and Exchange Commission (SEC), an independent agency of the United States federal government enforcing the law against market manipulation, has refused to list ARK 21Shares Spot Bitcoin exchange-traded fund (ETF).
According to the statement shared on January 26th, the ETF was supposed to be listed on the equities exchange Cboe BZX.
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In its statement, SEC claims that Cboe BZX exchange failed to “demonstrate that its proposal is consistent with the requirements,” such as anti-money laundering and other practices. When talking about when Bitcoin ETF receives a green light, SEC noted:
An exchange that lists Bitcoin-based ETFs 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.
It is worth noting that this is not the first time the SEC opposed such a proposal. In April, SEC also rejected Ark Investment Management and 21Shares' submission. However, despite the rejection, ARK and 21Shares filed a new application in May.
When filing its ETF for the second time, the Cboe BZX equities exchange claimed that it has a “comprehensive surveillance-sharing agreement with a regulated market of significant size,” which allows it to prevent market manipulation.
Moreover, the equities exchange allegedly had a surveillance agreement with the Chicago Mercantile Exchange (CME). Therefore, their ETF met all requirements and should be approved.
If the ETF had received a green light from the US regulators, it would allow institutions to gain exposure to Bitcoin’s price in the stock market.
It was believed that the ETF would have been managed by both Ark Investment Management and 21Shares.
Despite its efforts, SEC was unambiguous, ETF will not be listed. It is yet unclear whether 21shares and ARK will try their luck once again.