Early Rejection Of 21Shares Spot Bitcoin ETF Sparks Concerns

The US Securities and Exchange Commission’s (SEC) early delay of the ARK 21Shares Spot Bitcoin ETF application has raised concerns in the crypto community about what this move might mean for the potential launch of any Spot Bitcoin ETF this year.

In a tweet shared on his X (formerly Twitter) platform, Bloomberg Analyst James Seyffart questioned the SEC’s latest decision and whether or not it “may put the hammer down for any hopes of an ETF approval this year.” He further quizzed whether this means we could see an imminent delay on some other Spot Bitcoin ETF applications with a deadline in October.

On September 26, the SEC extended the time to decide on Cathie Wood’s ARK Invest ETF application until January 10, 2024 ( the final deadline). However, it is worrisome that the Commission had until November 11 (about 46 days to go) before making this decision but chose to do it this early. The SEC has usually made such a decision just days (and not weeks) before the deadline. 

Seyfarrt showed less optimism in a subsequent tweet when he stated, “Its so over. Everybody can pack up and go home now.” signaling that he had probably lost hopes of a Spot Bitcoin ETF being launched this year. 

Its so over. Everybody can pack up and go home now. https://t.co/wBsTHXCuEs

— James Seyffart (@JSeyff) September 26, 2023

His statements are more significant considering that he, alongside another Bloomberg analyst, Eric Balchunas, had increased the likelihood of a Spot Bitcoin ETF launching this year to 75% following Grayscale’s victory against the SEC in August.

Amidst all these delays, the SEC is yet to make a statement regarding the Grayscale’s application as the court had ordered the Commission to review the application again. Many expect the Commission to appeal the decision, with the deadline for an appeal coming in October. 

Many in the crypto community, including Seyffart, had two major theories on why the SEC decided early on the ARK 21Shares Spot Bitcoin ETF application. One, they attributed it to the potential government shutdown that is looming. 

The SEC is expected to be affected if the US government services were to shut down on October 1. The Commission will have to furlough 90% of its workforce and suspend most of its activities. However, it seems far-fetched considering that November 11 still seems far off, and government activities will have resumed by then.

The second major theory was that the letter that Congress sent to the SEC Chair Gary Gensler might have struck the wrong nerves, prompting the Commission to make such a decision. 

In the letter, the congressmen urged the Commission to approve the pending Spot Bitcoin ETFs following the court’s decision in the Grayscale case, stating that the “SEC’s current posture is untenable moving forward.”