The US securities watchdog, (the US SEC) has rejected the Bitcoin spot exchange-traded fund (ETF) proposal submitted by Ark Investment Management for a second time. In July 2021, Ark joined forces with Swiss ETP provider 21Shares to put forward the ETF proposal.
However, on March 31, 2022, the SEC dismissed the application, noting that the applicants needed to sufficiently demonstrate that the ETF was designed to avert fraudulent and manipulative activities and guard investors and the general public.
In response, the two companies refiled the application last May, hoping it would be approved. But their hopes have been dashed as the SEC has rejected it again.
SEC’s Stance On Bitcoin ETFs
The SEC has stated that it wants to be sure that the ETF’s trading does not become the dominant factor in determining prices in the market. It further states that there is a need for more regulation in the market before it can approve.
Ark Investment Management, headed by the highly-regarded Wall Street veteran Cathie Wood, has been added to the already long list of organizations whose Bitcoin spot ETF applications have been declined by the US financial watchdog.
The US SEC, presided over by Gary Gensler, has authorized ETFs that deal with Bitcoin futures but has not approved any BTC spot ETF. Meanwhile, Grayscale’s application for changing its Bitcoin Trust into an ETF remains the highest-profile rejection.
Grayscale, an offshoot of the Digital Currency Group (DCG), disagreed with the SEC’s decision and has launched a lawsuit against the regulator, with oral arguments in court between the two parties set to start on March 7.
The Rising Popularity Of Crypto ETFs
Besides crypto-based ETFs, ETFs are also available for various purchases and industries, such as commodities and fiat currencies. As Bitcoin’s popularity grows, Bitcoin ETFs and other crypto ETFs are becoming increasingly common.
For instance, the ProShares Bitcoin Strategy ETF (BITO) is listed on the NYSE. However, the US SEC denied other proposals for Bitcoin ETFs, citing similar reasons.
Most Bitcoin ETFs are constructed using futures to mimic the cryptocurrency’s movements. Meanwhile, investors can gain exposure to Bitcoin without ETFs or direct purchases by investing in blockchain and cryptocurrency-related companies.