Cboe’s BZX Exchange has named crypto exchange Coinbase as the market for its surveillance-sharing agreement when it refiled its spot bitcoin exchange-traded (ETF) fund applications on Friday. Fidelity, WisdomTree, VanEck, ARK Invest, Galaxy/Invesco and BlackRock all filed for spot bitcoin ETFs in recent weeks, hoping to succeed at launching a product the U.S. Securities and Exchange Commission (SEC) has rejected for years.
The SEC told some of these issuers that their applications were inadequate because they didn’t name the market that the fund sponsors are working with on their surveillance-sharing agreements, according to the Wall Street Journal. Cboe’s refiled application stated that Coinbase’s platform represents a substantial portion of U.S.-based and USD denominated Bitcoin trading.
The SEC has previously called for surveillance-sharing agreements with markets of significant size to prevent market manipulation or other unwanted behaviors and protect consumers. The lack of these agreements has been a major factor in the SEC’s rejections of bitcoin ETF applications.
Cboe’s refiled application said that the Spot BTC SSA (surveillance-sharing agreement) is expected to have the hallmarks of a surveillance-sharing agreement between two members of the ISG, which would give the Exchange supplemental access to data regarding spot Bitcoin trades occurring on Coinbase if the Exchange determines it is necessary as part of its surveillance program for the Commodity-Based Trust Shares.
The SEC still has to formally acknowledge it is reviewing the applications. The SEC will kick off an initial 45-day review period when it publishes the filings in the Federal Register – the national logbook – but can extend this to a total of 240 days. The SEC’s decision may be complicated by the fact that it sued Coinbase earlier this month on allegations of operating an unregistered securities exchange, broker, and clearinghouse.
It also remains to be seen whether the SEC will agree that Coinbase is a significant, regulated market for bitcoin. Coinbase will be the surveillance-sharing partner for all the spot bitcoin ETF applications.