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SEC Delays Its Verdict on Spot Bitcoin ETF

The US securities regulator extended the decision deadline on a joint spot bitcoin ETF application from ARK/21Shares and sought public comment

SEC Delays Its Verdict on Spot Bitcoin ETF

The US Securities and Exchange Commission (SEC) has delayed its decision on a spot Bitcoin ETF application from Cathie Wood’s ARK Investment Management.

Although the initial application deadline was Aug.13, the regulator stated it required some public comment on a rule change required to enable a new type of fund(s), according to the fresh filing. The SEC announced a 21-day comment period to get public feedback regarding the issue.

The main discussion points concern market manipulation and the reliability of so-called surveillance agreements. The SEC also questions if the CME, where bitcoin futures trade, “represents a regulated market of significant size related to spot bitcoin.”

This year, the possibility of spot bitcoin exchange-traded funds got a revival. Before that, the concept was labelled as doomed since over 70 related applications had been denied over the past decade. However, revised applications from major financial players like BlackRock or Fidelity Investments, with new security features, gave another hope to US crypto investors.

The delay of the long-anticipated decision is not a surprise, though. ARK Investment Management founder and CEO Cathie Wood has previously predicted that the SEC would delay its decision. At the same time, she believes once the regulator decides to approve one spot Bitcoin ETF, it will set the precedent for many other applications, so multiple approvals may take place simultaneously.

The early 2021 version of the ARK 21Shares Bitcoin exchange-traded fund (ETF) to be traded at the Chicago Board Options Exchange (Cboe) BZX Exchange was officially rejected by SEC in April 2023. The regulator stated that the exchange had not met the requirements of listing a financial product under its rules of practice as well as those of the Exchange Act.

Although the SEC has previously allowed ETFs that track bitcoin futures, spot Bitcoin ETFs that track physical bitcoin have all been rejected so far, due to concerns about investor protection and market manipulation. The rejected proposals were allegedly not “‘designed to prevent fraudulent and manipulative acts and practices” nor “protect investors and the public interest.”

Nevertheless, Wood’s firm remains committed to BTC funds, saying: “As the regulatory environment changes, we are committed to evaluating, launching, and amending products to provide efficient ways to access bitcoin in the US market.”

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.