ARK Invest and 21Shares have become the most recent applicants to see their spot market Bitcoin ETF registration rejected by the Securities and Exchange Commission. 

The application would have created the ARK 21Shares Bitcoin ETF to trade on the Chicago Board Options Exchange (Cboe), with 21Shares acting as the sponsor, Coinbase as custodian and ARK Investment would have handled marketing, according to the SEC S-1 form the companies filed.

Investor Cathie Wood’s ARK Invest and Switzerland-based 21Shares filed their form with the commission in June last year. The two firms have also filed to create the ARK 21Shares Bitcoin Futures Strategy ETF with Alpha Architect. If approved, the product would trade until the ARKA ticker on the Cboe.

An ETF, or exchange-traded fund, is a type of investment product tied to commodities, currencies, stocks or bonds.


In the case of the Bitcoin spot ETFs that firms have been attempting to register, the value of shares would be tied to the price of Bitcoin. It would allow investors to indirectly participate in crypto markets without actually buying and selling Bitcoin themselves.

With Bitcoin futures ETFs, the share price is tied to derivatives, or speculative bets about what the Bitcoin price will do. So far, the SEC has been approved several Bitcoin futures ETFs, including ProShares Bitcoin Strategy ETF (BITO), Valkyrie Bitcoin Strategy ETF (BTF), and VanEck Bitcoin Strategy ETF (XBTF). 

While the SEC has maintained that there isn’t enough regulation to approve a Bitcoin spot ETF, it has felt comfortable letting futures ETFs trade since the market is regulated by the Commodities Futures Trading Commission.

In its rejection order for the Bitcoin spot ETF, the SEC said firms had not sufficiently met the requirement to prevent fraudulent and manipulative acts and protect investors and the public interest. 


The letter went on to say that an exchange could meet that obligation “by demonstrating that the exchange has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.”

Now, the companies join a growing list of peers who have had their Bitcoin spot ETF applications rejected: NYDIG, Global X, Fidelity, First Trust, Krypton, Van Eck and WisdomTree.

The frustration from applicants is palpable. 

Grayscale CEO Michael Sonnenshein, whose own firm is set to receive a decision on their spot Bitcoin ETF in early July, told Bloomberg that “all options are on the table,” when asked if he’d consider filing a lawsuit against the SEC.

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