Industry Updates

SEC consults on proposed rule change for spot ARK 21Shares Bitcoin ETF

Only bitcoin futures ETFs are currently listed in the US

Stephan Roth

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The Securities and Exchange Commission (SEC) is seeking market feedback on whether to greenlight the spot ARK 21Shares Bitcoin ETF.

According to an SEC order on 29 August, the US regulator is considering a rule change to allow spot bitcoin ETFs to list and trade.

As part of the feedback, the SEC wants to understand if spot bitcoin ETFs could lead to risks of potential fraud and market manipulation.

Last year, the regulator approved the first bitcoin futures ETF, however, spot bitcoin ETFs are currently unable to launch.

21Shares is one of a number of ETF issuers looking for the SEC’s approval of spot bitcoin ETFs having first filed the ARK 21Shares Bitcoin ETF in June 2021.

ARK Investment Management will assist in the marketing of the ETF, with Coinbase Custody Trust Company responsible for acting as the custodian for the strategy.

The ARK 21Shares Bitcoin ETF will look to track the performance of bitcoin as measured by the S&P Bitcoin index.

The proceedings started on 13 May when the Cboe BZX Exchange filed with the SEC for a proposed rule change to list and trade the ARK 21Shares Bitcoin ETF.

A month later, the proposed rule change was published in the Federal Register on 1 June. At the time, the commission received no comments on the proposed rule change.

On 12 July, the SEC designated a longer period within which to approve the proposed rule change, disprove it or "institute proceedings to determine whether to disapprove the proposed rule change", the order said.

The CBOE BZY Exchange maintains steadfast in its claim that bitcoin is resistant to price manipulation and that other means to prevent fraud or manipulation acts exist to justify dismissing the requirement to enter into a comprehensive surveillance-sharing agreement with a regulated market of significant size related to spot bitcoin, the SEC order said.

At the time of writing, ARK Investment Management and 21Shares have not responded to a request for comment.

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