BlackRock's Bitcoin ETF Faces Surveillance Hurdles

BlackRock's Bitcoin ETF Faces Surveillance Hurdles

In the latest development surrounding BlackRock's endeavor to introduce a Bitcoin exchange-traded fund (ETF), a notable submission was made, featuring an intriguing inclusion of a "surveillance-sharing agreement" with renowned cryptocurrency exchange Coinbase.

As per a filing submitted to the United States Securities and Exchange Commission (SEC) on June 29, the Nasdaq stock exchange has refiled its request for a proposed rule change, seeking authorization to list BlackRock's Bitcoin ETF. 

Enclosed within the filing were specific particulars regarding an agreement reached on June 8 between Nasdaq and Coinbase, which aims to enhance the exchange's market surveillance program. This collaboration is intended to grant Nasdaq access to spot BTC trade data, thus supplementing its existing capabilities in monitoring the market.

Shortly after the SEC filing was made public, ARK Investment Management made modifications to its spot BTC ETF application, incorporating a surveillance-sharing agreement involving the Chicago Board Options Exchange (Cboe) and an undisclosed U.S.-based cryptocurrency exchange. Speculation arose regarding the identity of the exchange, with some suggesting it could potentially be Coinbase, thereby raising concerns about a potential conflict with BlackRock's ETF application.

According to reports, the SEC stated on June 30 that the cryptocurrency ETF filings submitted to the Nasdaq and the Cboe were deemed lacking in clarity and comprehensiveness. 

The regulatory body suggested that the applicants provide additional information regarding their surveillance arrangements. It is worth noting that BlackRock initially filed its application for the spot BTC ETF on June 15, preceding the SEC's comments.

As of the time of publication, the U.S. securities regulator had not granted approval for any spot ETFs linked to cryptocurrency investments, despite receiving numerous applications from various market participants. One notable instance involved Grayscale Investments, which had its spot Bitcoin ETF denied in June 2022. 

In response to the SEC's decision, Grayscale Investments filed a lawsuit against the regulatory body, claiming that it had failed to apply consistent treatment to similar investment vehicles. This legal action underscored the ongoing complexities and challenges surrounding the approval process for cryptocurrency-related ETFs.

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