SEC Delays Decision on Cathie Wood's Ark 21Shares Bitcoin ETF Application

The review process for the Ark 21Shares bitcoin exchange-traded fund application by the U.S. Securities and Exchange Commission has been prolonged. This extension is occurring in parallel with the commission's assessment of applications from established players in the traditional finance sector, such as BlackRock (BLK) and Fidelity Investments.

The SEC has issued an order inviting the public to share their input regarding the Ark 21Shares Bitcoin ETF application. This customary procedure tends to extend the decision-making timeline by several more weeks. According to the regulatory guidelines, the SEC is allotted a maximum of 240 days to reach a final verdict once the evaluation process begins. During this period, the SEC is affording the wider public a duration of three weeks to provide insights and opinions on the proposed ETF. Furthermore, there is an additional five-week window allocated for responding to the initial set of comments received.

"In sum, the Exchange believes that this proposal is consistent with the requirements of Section 6(b)(5) of the Act, that this filing sufficiently demonstrates that the CME Bitcoin Futures market represents a regulated market of significant size, and that on the whole the manipulation concerns previously articulated by the Commission are sufficiently mitigated to the point that they are outweighed by investor protection issues that would be resolved by approving this proposal," the filing said. .

Ark Investment Management and 21Shares, who have been pursuing approval for an ETF since 2021, re-submitted their initial bitcoin ETF applications earlier this year. This move comes after their second attempt was turned down by the SEC. The Securities and Exchange Commission (SEC) had previously declined spot bitcoin ETF proposals due to concerns about potential market manipulation and insufficient investor safeguards against detrimental actions.

If an ETF gets the green light, a wider range of the general investing population could tap into trading and retaining the value of Bitcoin without the necessity of directly owning the digital asset.

On Monday, Cathie Wood, the CEO of Ark Invest, expressed to Bloomberg her anticipation of a postponement in the decision regarding her company's application. However, she remains confident that the SEC will ultimately grant approval to multiple applications in unison.

"Because most of these essentially will be the same, it will come down to marketing, communicating, the message" to see how they do, she said. "We're trying to get the word out there that our research is deep, and we've been doing it since 2015."

Nevertheless, Scott Farnin, the legal advisor for the consumer advocacy organization Better Markets, expressed in a pre-SEC decision statement that the regulatory body must outrightly dismiss the applications for a bitcoin ETF. He contended that the proposed surveillance-sharing agreements were "wholly inadequate."

"The spot bitcoin markets (1) have a history of artificially inflated trading volumes due to rampant manipulation and wash trading; (2) are highly concentrated; and (3) rely on a select group of individuals and entities to maintain bitcoin’s network," Farnin said. "These are features of the bitcoin network that make a proposed spot bitcoin-based ETP extremely vulnerable to manipulation by bad actors, posing unnecessary risks to investors and the public interest. The proposed rule changes offer little to neutralize these threats."

Bitcoin (BTC) experienced a brief surge of around $100 following the news, but swiftly retraced its steps to reach approximately $29,500.