Last week, a story from the Wall Street Journal (WSJ) showed that insiders at the SEC were unhappy with the recent applications for spot bitcoin ETFs from big financial companies like Blackrock, Wisdomtree, Valkyrie, Fidelity, Ark Investment, and Invesco.
After this information came out, four of the companies mentioned—Fidelity, Vaneck, Invesco, and Wisdomtree—took action and sent in their papers again.
People with knowledge of the situation told WSJ writer Vicky Ge Huang that the regulatory group found the ETF registrations to be inadequate. Cboe and Nasdaq were told about this.
In response to the SEC’s comments, Cboe, which runs an exchange, said it would resubmit its spot bitcoin ETF applications.
Cboe kept their promise and worked with the global cryptocurrency exchange Coinbase to stop possible market manipulation. They also made the necessary updates and changes to the papers that Fidelity, Vaneck, Invesco, and Wisdomtree had sent in the beginning.
On Friday, Cboe officially resubmitted its application to the U.S. Securities and Exchange Commission (SEC) to start a bitcoin exchange-traded fund managed by Fidelity. This was done to address the SEC’s concerns and clear up any confusion or gaps in their earlier filing.
The goal is to ensure a smooth and compliant process for the ETF launch while preventing market manipulation.
Coinbase Officially Designated as Surveillance-Sharing Partner; Blackrock and Ark Opt Out
On Friday, a significant new development took place when Coinbase announced that it has formally designated a surveillance-sharing agreement (SSA) partner.
It is important to note that although Blackrock and Ark did not resubmit their applications, Blackrock had previously specified Coinbase as its chosen SSA partner. This is despite the fact that Ark did not resubmit its application.
In its amended applications, Cboe emphasized that Coinbase’s platform plays a significant role in U.S.-based and USD-denominated Bitcoin trading.
According to information from Cboe’s Fidelity bitcoin ETF filing, Coinbase’s platform accounted for approximately half of U.S. dollar-bitcoin trading in May.
“The Spot BTC SSA [surveillance-sharing agreement] is expected to encompass the essential characteristics of a surveillance-sharing agreement between two members of the ISG. This would grant the Exchange supplementary access to data about spot Bitcoin trades occurring on Coinbase. The Exchange will utilize this data as part of its surveillance program for the Commodity-Based Trust Shares. Similar to how exchanges exchange information within the ISG,” stated the filing.
SEC Pushes for Surveillance-Sharing Agreements, Bitcoin ETFs Denied
The SEC has advocated establishing surveillance-sharing agreements with significant markets, stating that such deals prevent market manipulation and safeguard consumers. This lack of cooperation has substantially influenced the SEC’s rejection of various Bitcoin ETF applications.
“The marketplace is not only not transparent and not audited. But it’s also, according to the SEC, rife with manipulation,” said John Reed Stark. A former chief of the SEC’s Office of Internet Enforcement said of the cryptocurrency market.
Regarding the current situation, the SEC has yet to acknowledge its application review formally.
Once the filings are published in the Federal Register. Which serves as the national logbook, a 45-day initial review period will commence. However, this period can be extended up to 240 days.
When approached for comments on these matters, the SEC, Cboe, Nasdaq, Fidelity, and BlackRock declined to provide statements. While Coinbase was unavailable for immediate comment.
Recently filed bitcoin ETF applications by BlackRock and Fidelity have contributed to a significant surge in bitcoin prices, rising more than 20% since June 15 to reach one-year highs.
The cryptocurrency market faced challenges earlier in the year due to several crypto company collapses. Such as the sudden shutdown of the exchange FTX in late 2022, which negatively impacted investor sentiment.
Despite the SEC’s request for additional information on bitcoin ETF filings. The price of bitcoin has remained resilient, indicating that sentiment has not turned bearish.