The disclosure was made in response to comparable requests for information on surveillance-sharing arrangements made in the previous 7 days by financial firms BlackRock and Fidelity.
A new application for a spot Bitcoin exchange-traded fund (ETF) in the US has been made by cryptocurrency fund manager Valkyrie, and it involves a “surveillance-sharing agreement” with Coinbase. The Valkyrie Bitcoin Fund’s listing on the Nasdaq stock exchange is the subject of its most recent filing, which was submitted on July 3rd.
The Nasdaq has submitted a proposed rule modification to the U.S. Securities and Exchange Commission (SEC) that would permit the listing of a spot Bitcoin ETF. Additionally, it reveals an arrangement between Nasdaq and Coinbase for the surveillance-sharing of trade data, which gives Nasdaq “additional access to data regarding spot Bitcoin trades.” The purpose of this agreement is to improve market surveillance capabilities.
Following similar measures by asset managers BlackRock and Fidelity in the previous week, which also included information on surveillance-sharing arrangements in their ETF applications, Valkyrie has re-filed with the SEC. According to the SEC’s statement on June 30th, the inclusion of surveillance arrangements could help submissions that are unclear or incomplete, thus enhancing the likelihood that they would be approved by regulators.
Related: Spot Bitcoin ETF Filings Refiled by Fidelity, VanEck, and Others After Reports of SEC Rejections
Valkyrie has been submitting petitions since 2021, but its most recent attempt to obtain SEC clearance for a spot BTC ETF was in June. Notably, in October 2021, Valkyrie successfully introduced an ETF connected to Bitcoin futures. However, no spot ETFs that are directly tied to cryptocurrencies have yet received SEC approval.
In recent years, numerous companies have unsuccessfully applied to the SEC for cryptocurrency investment vehicles. Grayscale Investments sued the SEC in June 2022 after the SEC rejected its spot Bitcoin ETF, claiming that it had treated related investment products differently. The difficulties faced by businesses looking for regulatory clearance for cryptocurrency-related ETFs are highlighted by this court action.
It appears that applicants are understanding the significance of addressing regulatory concerns linked to market manipulation and investor protection because recent ETF filings include surveillance-sharing agreements. Exchanges like Coinbase can help improve control and transparency in the cryptocurrency sector by granting access to surveillance data.
Related: Coinbase to Provide Market Data for BlackRock's Bitcoin ETF
The SEC’s cautious approach to issuing spot Bitcoin ETFs is motivated by worries about investor protection, market manipulation, and price volatility. Incorporating surveillance-sharing agreements attempts to allay these worries and show a dedication to upholding fair and orderly markets.
It’s still unclear how these most recent ETF registrations, including Valkyrie’s, will turn out. Surveillance agreements, however, may improve the chances of getting regulatory approval since they show a proactive attitude to addressing regulatory issues and promoting market integrity.