Fidelity, WisdomTree, VanEck, ARK Invest, Galaxy/Invesco, and BlackRock have all applied for spot bitcoin ETFs in recent weeks in hopes of launching a product that the US Securities and Exchange Commission has rejected for years. While BlackRock applied to Nasdaq, the other companies are working with Cboe.
According to the Wall Street Journal, the SEC on Friday told both Nasdaq and Cboe that their filings were “inadequate” because they failed to identify the market with which the fund’s sponsors are partnering in their monitoring-sharing arrangements.
In its refiled filings, Cboe said that Coinbase’s platform “accounts for a significant portion of US-based and US-dollar-denominated bitcoin trading,” citing the US crypto exchange as a partner for this monitoring-sharing Agreement.
“The spot BTC SSA [surveillance-sharing agreement] It is expected to feature the features of a monitoring sharing agreement between two members of the ISG, which would grant the exchange additional access to data on spot bitcoin transactions occurring on Coinbase, if the exchange deems it necessary as part of its monitoring program “Commodity-based trust stocks will be exchanged in a manner similar to stock exchanges under ISG,” the filing reads.
The SEC has in the past called for co-surveillance arrangements with “significant size” markets, arguing that this is necessary to prevent market manipulation or other undesirable behavior and to protect consumers. The lack of these agreements played a major role in many previous SEC denials of Bitcoin ETF applications.
The regulatory authority has yet to officially confirm that it is examining the applications. The SEC will initially initiate a 45-day review period with the publication of filings in the Federal Register – the national logbook – but may extend this to a total of 240 days.
Complicating the SEC’s calculus might be the fact that earlier this month it sued Coinbase on charges of operating an unregistered securities exchange, unregistered broker, and clearing house — though the SEC does not claim that Bitcoin itself is a security , and SEC Chairman Gary Gensler has often referred to it as an example of a digital asset that is not a security.
It also remains to be seen whether the SEC will agree that Coinbase is a significant, regulated marketplace for Bitcoin.
UPDATE (June 30, 2023, 20:55 UTC): Adds additional details.
UPDATE (June 30, 2023, 21:22 UTC): Updates state that Coinbase will be the monitoring sharing partner for all spot bitcoin ETF applications.
UPDATE (June 30, 2023, 21:50 UTC): Clarifies details.