The US Securities and Exchange Commission (SEC) has but once more refused to offer its regulatory blessing to Ark Investment Management and exchange-traded notice (ETN) issuer 21Shares to checklist a spot bitcoin (BTC) exchange-traded fund (ETF).
According to the doc printed on January 26, the SEC mentioned the Cboe BZX Exchange on which the ETF can be listed and acknowledged that,
“The Commission concludes that BZX has [failed to] exhibit that its proposal is according to the necessities of Exchange Act Section 6(b)(5), which requires, in related half, that the guidelines of a nationwide securities trade be “designed to stop fraudulent and manipulative acts and practices” and “to guard buyers and the public curiosity.””
It went on to say that, when contemplating whether or not the proposal by the trade to checklist and commerce these shares is designed to stop fraudulent and manipulative acts and practices, the SEC used the similar analytical framework it had beforehand used when assessing if an trade seeking to checklist an exchange-traded product (ETP) can meet its obligations underneath Exchange Act Section 6(b)(5).
An trade that lists bitcoin-based ETPs can meet its obligations underneath this Act, mentioned the Commission, by demonstrating that it has “a complete surveillance-sharing settlement with a regulated market of serious measurement associated to the underlying or reference bitcoin property.”
And whereas surveillance-sharing agreements will not be the solely means for a list trade of a commodity-trust ETP to satisfy its obligations, mentioned the doc,
“Where, as right here, a list trade fails to determine that different means to stop fraudulent and manipulative acts and practices might be ample, the itemizing trade should enter right into a surveillance-sharing settlement with a regulated market of serious measurement as a result of such agreements detect and deter fraudulent and manipulative exercise.”
The SEC goes on to say that BZX asserts that its proposal is according to Section 6(b)(5) of the Exchange Act as a result of:
- the trade has a complete surveillance-sharing settlement with a regulated market of serious measurement;
- there are different means to stop fraudulent and manipulative acts and practices which might be ample to justify dishing out with the detection and deterrence of fraud and manipulation supplied by a complete surveillance-sharing settlement with a regulated market of serious measurement associated to identify bitcoin.
However, the Commission argued that BZX didn’t present ample different means to stop fraudulent and manipulative acts and practices for the SEC to vary its thoughts.
It additionally concluded that BZX has not established that it has a complete surveillance-sharing settlement with a regulated market of serious measurement associated to identify bitcoin, including that,
“BZX repeats varied assertions made in prior bitcoin-based ETP proposals, together with in the Previous ARK Filing, that the Commission has beforehand addressed and rejected, together with in the prior ARK 21Shares Order – and extra importantly, BZX doesn’t reply to lots of the Commission’s causes for rejecting these assertions.”
The SEC had already rejected an application filed by funding merchandise supplier 21Shares and Ark Invest, the fund led by the well-known investor Cathie Wood, again in April, 2022. The duo filed one other utility in May. The SEC pushed the deadline to approve or disapprove ARK 21Shares’ ETF a number of instances final 12 months.
Also final 12 months, 21Shares said it was partnering with asset supervisor ByteTree Asset Management to launch a mixed bitcoin and gold ETP known as the 21Shares ByteTree BOLD ETP (BOLD), listed on the SIX Swiss Exchange.
Meanwhile, as reported, the crypto-focused ETF market noticed a topside push in 2023 amid a surge in cryptocurrency costs. By mid-January, the 14 top-performing ETFs have been all tied to digital property, excluding leveraged merchandise, out of about 2,000 funds tracked by Bloomberg, which famous that crypto funds have been dominating the $6.8 trillion ETF market.