As the world’s largest asset manager, BlackRock’s filing to create a spot bitcoin ETF in the U.S. has sparked speculation about its chances of approval. Market watchers have focused on a mechanism in the application that flags suspicious trades to the authorities. This Surveillance-Sharing Agreement (SSA) has been included in follow-on filings, but the real influence on the SEC’s decision could be an information-sharing deal that gives regulators the right to demand extra background.
The nuance here can be characterized as the difference between push and pull, said a person familiar with the matter. The SSA concerns data surveillance carried out by the spot exchange, Coinbase (COIN) in this case, which can be pushed to regulators, ETF providers and listing exchanges if deemed suspicious. Information-sharing agreements, in contrast, allow regulators and ETF providers to pull data from the exchange.
The SEC has long required surveillance sharing to prevent market manipulation of crypto, and the Coinbase and NASDAQ Information Sharing Term Sheet gives regulators the ability to request specific trades or traders, and even personally identifiable information (PII). This structure is found in other markets, and an ETF provider must comply with the agreement to be successful.
If that is true, I believe the SEC will not only approve this ETF, but will approve it and take a victory lap, said Dave Weisberger, CEO of crypto trading platform CoinRoutes.