Another Rejection from the SEC

The SEC has once again pulled the rug out from under the crypto community, rejecting the proposed ARK 21Shares Bitcoin ETF. This news came through on January 26, 2023, echoing a similar decision made last April. It seems the SEC is playing hard to get with the exchange-traded fund scene.

What’s the ETF Fuss All About?

If approved, this ETF would have been managed by Cathie Wood’s ARK Investment Management and 21Shares, providing a legitimate entry point for investors looking to ride the Bitcoin wave from the cozy confines of the regulated stock market. Think of it as trying to swim with the big fish while still in a kiddie pool.

The Road to Reapplication

The drama began back in June 2021 when the Cboe BZX Exchange first sought to list the ETF. After a rejection in 2022, they returned to the drawing board, reapplying with new legal arguments that might have sounded impressive in a courtroom. The exchange argued that a “comprehensive surveillance-sharing agreement” with a market of significant size—namely, the Chicago Mercantile Exchange (CME) where Bitcoin futures are traded—should be enough to sway the SEC’s decision.

SEC’s Reasons for Rejection

Alas, the SEC wasn’t having any of it. They pointed out that the relationship with the CME only deals in Bitcoin futures and doesn’t apply to spot Bitcoin. Think of it as pointing to the dessert menu when they only asked if you wanted a salad. Furthermore, the SEC argued that while surveillance agreements are helpful, they aren’t a magic wand—especially if you can’t prove you have other methods to avoid trading shenanigans.

The Stakes Are High

To add to the tension, the SEC hasn’t granted any approvals for spot Bitcoin ETFs as of now. The mood is getting serious, especially for Grayscale Investment Trust, which is in a legal battle with the SEC after its bid to convert its Bitcoin Trust into a spot Bitcoin ETF was shut down. With oral arguments looming this March, it seems like the cryptocurrency community is in for a wild ride.