The SEC’s Denial
The United States Securities and Exchange Commission (SEC) has made headlines again, not for approving a shiny new Bitcoin exchange-traded fund (ETF), but for axing the ARK 21Shares Bitcoin ETF application. In a filing released on a typical Thursday, the SEC sent a strong message, essentially saying, ‘Not today!’ to the proposed rule change from the Chicago Board Options Exchange (Cboe). This proposal aimed to allow shares of the ARK 21Shares Bitcoin ETF to be traded, but the SEC felt it didn’t meet the high bar set for investor protection.
Why the SEC Said No
In layman’s terms, the SEC declared that the proposal wasn’t structured to thwart those pesky fraudulent and manipulative acts. They insisted that the Cboe BZX Exchange had failed to cross its T’s and dot its I’s regarding regulatory compliance. To list a Bitcoin ETF, exchanges need a fairly robust surveillance agreement with a regulated market that has a substantial presence relating to Bitcoin assets. This is no small feat!
The Timeline of Hope
Believe it or not, this saga began back in June 2021 when 21Shares teamed up with Ark Investment Management to throw their hats in the ring for the Bitcoin ETF spotlight. They hopped on the Cboe BZX Exchange, hoping to launch under the catchy ticker, ARKB. The SEC had 180 days to deliver their verdict but decided to stretch out their deliberation until April 2022. Talk about a suspenseful thriller – the kind of drama that keeps you on the edge of your seat!
Comparison with Bitcoin Futures
Fast forward to today, and the SEC has been more lenient with crypto futures ETFs. They’ve given a nod to various funds linked to Bitcoin futures from companies like ProShares and Valkyrie. Under the current atmosphere, it seems spot crypto ETFs are still in the doghouse when it comes to regulatory approval. So, what’s the difference? Essentially, futures ETFs deal with contracts rather than the underlying assets themselves, which appears to soothe the SEC’s concerns significantly more than the spot application does.
The Road Ahead for Bitcoin ETFs
Despite this setback for ARK and 21Shares, there’s slight hope glimmering on the horizon. Grayscale, another major player, has its own spot Bitcoin ETF application simmering on the SEC’s back burner. They’ve been rallying U.S. investors to voice their opinions in the hopes of swaying the regulatory body. Rumor has it that we might hear the verdict by July 6, which will certainly have crypto watchers holding their breath once again.
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