News of potential rejection from the SEC for language surrounding surveillance agreements have led to a flurry of amended refilings.
Several asset managers have resubmitted their applications for their spot Bitcoin exchange-traded funds (ETFs), including Fidelity, WisdomTree, VanEck, Invesco, and BlackRock. This choice was made in response to reports that the initial applications did not adhere to the SEC’s (Securities and Exchange Commission) requirements for the language in surveillance-sharing agreements by June 30, 2023.
The Wall Street Journal stated that the lack of clarity in the surveillance-sharing agreements between the asset managers and the exchanges that would list the ETF products was the main reason why the SEC was likely to reject the spot Bitcoin ETF applications. The exchanges at discussion here are either Nasdaq or Cboe Global Markets.
The applications’ omission to specify a specific spot Bitcoin exchange that would sign into a “surveillance-sharing agreement” (SSA) with Nasdaq and Cboe raised issues with the SEC. The SEC mandates an SSA in order to guarantee the integrity of the asset’s underlying market because it aids in the detection and prevention of manipulative trading practices and market fraud.
Fidelity, WisdomTree, VanEck, and Invesco, who had all just recently submitted spot Bitcoin ETF applications, re-filed updated files on June 30th in response to the SEC’s worries. The exchanges’ anticipated surveillance-sharing agreements with Coinbase, Inc. are stated directly in these latest papers.
BlackRock filed for a spot Bitcoin ETF as well, but used Nasdaq rather than Cboe. However, since BlackRock’s prior file from June 15th is still posted as pending on Nasdaq’s website, it is unclear whether the company has revised or resubmitted it.
The SEC has not yet publicly commented on the pending ETF applications or officially rejected them as of the time of publishing. The material was obtained via unnamed individuals, according to the Wall Street Journal story.
Applications for spot Bitcoin ETFs have received a lot of interest since they would give investors access to Bitcoin through a regulated and publicly traded investment instrument, which would encourage more traditional financial institutions to adopt cryptocurrencies.
The asset managers’ revised applications, which ask for permission to provide investors with spot Bitcoin ETFs, show that they are making an effort to allay the SEC’s worries about surveillance-sharing arrangements. However, the future of these ETFs is still up in the air until the SEC offers official comment and clearance.