"The Commission is publishing this notice and order to solicit comments on the proposed rule change, as modified by Amendment No. 3, from interested persons and to institute proceedings pursuant to Section 19(b)(2)(B) of the Act to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 3," the SEC's order said.
The delay in a decision regarding the ARK 21Shares Bitcoin ETF "was fully expected on our side," said James Seyffart, an ETF research analyst at Bloomberg Intelligence.
"It is just a step in the process to ultimately seeing a spot ETF approved or denied," Mr. Seyffart said.
ARK Investment Management CEO and CIO Cathie Wood and 21Shares CEO and co-founder Hany Rashwan issued a statement Friday in the wake of the SEC's order.
"While we are highly confident, we understand that the process for approving a spot (bitcoin) product will not happen overnight so we remain committed to providing an efficient, regulated, safe, and reliable way to access bitcoin for the U.S. market," the statement said. "As the regulatory environment changes, we remain committed to launching products that provide efficient ways to access bitcoin for the U.S. market."
The ARK 21Shares Bitcoin ETF was one of seven spot bitcoin exchange-traded products referenced in an Aug. 8 comment letter filed with the SEC by Better Markets, a non-profit organization founded in the wake of the 2008 financial crisis. The letter urged the SEC to disapprove proposed rule changes filed by the Cboe BZX Exchange and the Nasdaq Stock Market to list and trade shares of spot bitcoin-based exchange-traded products.
Spot bitcoin markets have a history of artificially inflated trading volumes due to "rampant manipulation and wash trading," are highly concentrated and depend on a select group of people and entities to maintain bitcoin's network, the letter claimed.
"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 letter said.