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SEC Holds Ark Investment ETF in Suspense Despite Lawmakers’ Push

Published September 27, 2023 10:16 AM
Teuta Franjkovic
Published September 27, 2023 10:16 AM

Key Takeaways

  • As Congress nears the end of its budget deliberations, the SEC has pushed back a couple of deadlines for responding to ETF applications.
  • The SEC has formally postponed its responses to Ark 21 Shares and Global X’s applications for spot Bitcoin ETF listings.
  • It’s the third time the SEC has postponed a decision.

Ark Investment, the first US exchange-traded fund that makes direct Bitcoin investments is still awaiting approval from the US Securities and Exchange Commission (SEC).

According to documents  published on its website Tuesday, September 26, 2023, the SEC postponed a decision on a filing by crypto exchange-traded product issuer 21Shares and Cathie Wood’s ARK Investment Management.

SEC’s Third Postponement

Since ARK and 21Shares first submitted a request to start an exchange-traded fund (ETF) in April, the US regulator has postponed its decision three times. The SEC now has until January 10 to provide its opinion.

The regulator’s postponement occurs earlier than anticipated by market analysts. According to the law, they had until November 11 to decide whether they would accept, reject, or postpone a decision. Numerous other issuers, including powerhouses BlackRock Inc. and Fidelity Investments, are also anxiously awaiting word.

James Seyffart, ETF analyst at Bloomberg Intelligence, expressed his shock at the SEC’s early action on ARK and 21Shares.

“My assumption is they’re worried about the government shutdown and trying to get ahead of that,” he said.

The filing came in response to a letter from four US Representatives urging SEC chair Gary Gensler to “immediately” approve a spot Bitcoin ETF. The congressmen argued the SEC used “inconsistent and discriminatory standards” in licencing crypto-linked ETFs but not spot investment vehicles.

To date, SEC hasn’t approved any spot BTC ETF for listing on a US-based exchange. Following the SEC’s setback in court against Grayscale in August, many industry professionals predicted that the agency would reexamine pending ETF applications.

The next deadlines for spot crypto ETF applications from seven big firms — BlackRock, WisdomTree, Invesco Galaxy, Valkyrie, Bitwise, VanEck, and Fidelity — are set for October at the time of publication. The SEC has the authority to postpone or extend these dates until March.

SEC Postpones Global X Application

The SEC also postponed  a decision on Global X’s spot-Bitcoin ETF application.

Global X, which filed last month  to become the SEC’s ninth active spot-Bitcoin application, now has until November 21  to receive a response. The fund, if approved, would provide investors with “exposure to Bitcoin with important protections that are not always available to investors who invest directly in Bitcoin,” according to the proposal.

The regulator has rejected spot Bitcoin ETF products, citing potential market manipulation and insufficient investor protections, but a federal court ruling last month stated the agency had been “arbitrary and capricious” in its ETF decisions and must reconsider.

The SEC has usually taken the full 240 days to make a final determination, so these deadlines were expected. The danger of a government shutdown, though, appears to have postponed its interim decision till Tuesday. The SEC usually waits until a few days before the deadline. During the previous shutdown in 2019, the SEC requested that an applicant retract its entire filing.

The SEC stated  in its filings on Tuesday that it “finds it appropriate to designate a longer period within which to take action,” allowing the regulator “sufficient time to consider” its decision.

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