The United States Securities and Exchange Commission (SEC) has again denied providing regulatory approval to 21Shares – an issuer of exchange-traded notes (ETNs).
Another entity facing a denial from the SEC is Ark Investment Management. As per the document, the regulator conversed with the Cboe BZX Exchange. On this exchange, the listing of the ETF would be carried out.
US Watchdog Disapproves BTC EFT Application of Cboe BZX Exchange Citing Unfulfilled Regulatory Requirements
The SEC gave conclusion that BZX has remained unsuccessful in displaying its proposal’s consistency with the demands of Exchange Act Section 6(b)(5).
The respective law requires that the regulations of a securities exchange operating at a national level should be structured to circumvent manipulative practices and fraudulent acts. Along with this, the law directs the protection of the public interest as well as the investors.
It additionally stated that the regulatory body utilized the same analytic agenda address if the exchange eager for listing an exchange-traded product can fulfill the needs of the Exchange Act Section 6(b)(5). As per the SEC, this was done to prevent manipulative and fraudulent practices.
The securities regulator is of the view that the exchange involved in listing Bitcoin-based exchange-traded products has to fulfill its responsibilities under the respective Act.
In this way, it can demonstrate having a thorough surveillance-sharing contract with a huge market that is regulated. Surveillance-sharing contracts are more than just offering a method to let an exchange listing a commodity-trust ETP fulfill its responsibilities.
The document also discussed the listing exchange that remains ineffective in establishing that the rest of the means to circumvent manipulative and fraudulent operations will be enough.
As noted in the document, such an exchange should enter a surveillance-sharing contract with a big regulated market. As per the SEC, the respective contracts notice and discourage manipulative and fraudulent operations.
The securities regulator also provided the assertions made by the BZX exchange. As per the watchdog, the exchange considers its proposal to be in line with the Exchange Act’s Section (b)(5).
The exchange supports its assertion by saying that it has a thorough surveillance-sharing contract with a market that is huge and regulated. It reportedly added to have other means that are necessary to circumvent manipulative and fraudulent practices and activities.
As the exchange reportedly asserted, these factors can justify the provision of detection as well as the deterrence of manipulation and fraud.
Nonetheless, the regulator specified that no other sufficient means were disclosed by BZX to stop manipulative and fraudulent activities. Thus, it added, the exchange could not alter the mind of the regulatory body.
Apart from that, the commission revealed that BZX remained ineffective even in proving that it possesses a wide surveillance-sharing contract with some regulated market that is huge and deals with spot Bitcoin.
Mutual EFT Application of ARK Invest and 21Shares Had Already Been Rejected by the SEC
The SEC claimed that BZX reiterated several assertions made by ARK Invest and 21Shares in their ETP proposal. Back in 2022’s April, the US-based securities watchdog had in advance dismissed an application submitted by Ark Invest (the fund that runs under Cathie Wood) and 21Shares.
The duo submitted another application later in May last year. At this, the regulator provided several deadlines to accept or reject their ETF application in 2022.