SEC denies Cathie Wood’s bitcoin ETF for second time

abdelaziz Fathi

The approval of a regulated crypto derivative is still looking far less likely, as the US regulators have once again denied Cathie Wood’s application for a long-awaited spot bitcoin exchange-traded fund (ETF).

The application would have created the ARK Investment Management’s and 21 Shares’ Bitcoin ETF trade on the Chicago Board Options Exchange (CBOE) BZX Exchange.

The agency said the filing did not meet “the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest.”

Cathie Wood’s ARK Investment Management and 21Shares amended its application back in May after the US Securities and Exchange Commission rejected their first proposal for an ETF that would invest directly in bitcoin. As part of the changes, the Switzerland-based investment-products issuer said its product would use US Bank as a qualified custodian, hoping such a tweak will win its bitcoin exchange-traded fund application the SEC’s blessing.

A decision was expected no earlier than mid-July, 45 days from the time the applications for the funds were published in the federal register, but the SEC is yet to approve a single BTC exchange-traded fund. The latest deadline for approval or disapproval of the ARK 21Shares Bitcoin ETF was January 24, 2023.

“It is essential for an exchange listing a derivative securities product to enter into a surveillance-sharing agreement with markets trading the underlying assets for the listing exchange to have the ability to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of exchange rules and applicable federal securities laws and rules,” stated the SEC ruling.

There are a number of applications underway to get a bitcoin ETF listed, but so far none have been approved by the SEC. The agency only extended the deliberation window or opened the matter to public comments to avoid reaching any decision on a proposal, meaning today’s rejection is no surprise.

Earlier, the regulator also pushed the deadline to make a decision on Kryptoin Bitcoin ETF, Global X Bitcoin Trust, Valkyrie XBTO Bitcoin Futures Fund, and Wisdomtree Bitcoin Trust. Most recently, it denied an application by First Trust Advisors and SkyBridge, citing concerns over “fraudulent and manipulative acts and practices” in markets where bitcoin is traded.

 

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