Last year, asset manager Ark Investment Management and crypto firm 21Shares teamed up to create a Bitcoin ETF. The procedure initiated for this purpose with the Securities and Exchange Commission (SEC) met with a refusal. Stakeholders subsequently formulated a new request. The SEC is still not in favor of it.
An application that does not comply with SEC requirements
The crypto companies Ark Investment Management and 21Shares are once again at an impasse. Their request to create a bitcoin ETF (BTC), sent to the SEC last May, was rejected.
According to the answer of the SEC published Thursday, January 26, the request of Ark Investment Management and 21Shares does not meet the requirements. The regulator believes that the Cboe BZX exchange, on which the ETF should be listed, does not provide safeguards to prevent fraudulent and malicious practices.
This is not the first time that Ark Investment and its partner have seen their efforts shattered. In April 2022, the two companies had already suffered a rejection from the SEC on almost the same grounds. Reasons often deemed incomprehensible by a large majority of crypto companies that have taken similar steps.
A potential lawsuit?
ARK Investment and 21Shares have not yet disclosed the strategy they plan to implement in the face of this new refusal from the SEC. But in a context where the latter rejects certain requests for conversion into ETFs while accepting others, the company could want to take legal action to win its case.
This is the option prioritized by Grayscale Investments, which filed a lawsuit against the SEC, following the latter’s opposition to its request to convert its Bitcoin trust into an ETF. Recently, the company spoke about this refusal which it considers unfair, from the point of view of the law, but above all inequitable.
The trial related to this case should open next March and the resulting decision could have a major impact on ETF conversion procedures, which are increasingly requested by crypto companies.
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