We have followed for years the saga of the many applications for a spot Bitcoin ETF that have been denied by the U.S. Securities and Exchange Commission (SEC).  See here and here.  In April 2022, however, the SEC approved the Teucrium ETF — resting its decision on the fact that it was a futures ETF.  But, unlike the earlier approved funds that had been filed under the 40 Act, Teucrium had filed under the Securities Act of 1933 and the Securities Exchange Act of 1934.  Since those were the statutes under which the spot ETFs had been filed, and under the general principle of treating like situations alike absent reasoned justification, there was once again hope that, perhaps, the SEC would actually approve a spot Bitcoin ETF.  That did not happen.  The SEC, for example, denied a request from Grayscale to convert its Bitcoin trust to a spot ETF (see here) and a request from Bitwise for a spot Bitcoin ETF (see here).

Among the rejections of a spot Bitcoin ETF was an application by Ark Investment Management and Swiss investment products provider 21Shares.  That rejection was in April 2022, but the two companies filed a new application in May 2022.   The request sought to demonstrate that it made no sense to distinguish between the spot and futures Bitcoin markets.  Ark and 21Shares said in its application: “In the Teucrium approval, the commission found the CME bitcoin futures market to be a regulated market of significant size as it relates to CME bitcoin futures, an odd tautological truth that is also inconsistent with prior disapproval orders for [exchange-traded products] that would hold actual bitcoin instead of derivatives contracts (‘spot bitcoin ETPs’) that use the exact same pricing methodology as the CME bitcoin futures.”

Once again, the SEC was not persuaded.  In its Order dated January 26, 2023, the SEC rejected the new application.  In language it has used before, the SEC said: 

The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), which requires, in relevant part, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.

In the meantime, Grayscale has appealed the SEC’s decision in its case to the D.C. Circuit, highlighting the arbitrary nature of the SEC’s position concerning spot ETFs.  Oral argument is scheduled for March 7.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.