- July 8, 2023
- Posted by: [email protected]
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In a move mirroring recent filings from other asset managers like BlackRock and Fidelity, the Nasdaq stock exchange resubmitted a proposal for a spot Bitcoin exchange-traded fund (ETF) in the United States, with the notable addition of a “surveillance-sharing agreement” involving Coinbase. According to the filing with the Securities and Exchange Commission (SEC), the application was made on July 3.
The ETF application is related to the Valkyrie Bitcoin Fund, a cryptocurrency fund manager that has been persistent in its pursuit of a spot Bitcoin ETF. The latest filing disclosed details of an agreement signed on June 30 between Valkyrie and Coinbase, designed to provide Nasdaq with “supplemental access to data regarding spot Bitcoin trades.” This surveillance-sharing arrangement could play a crucial role in the regulatory approval process, as hinted at by the SEC on June 30, which noted that previous crypto ETF filings with Nasdaq and Cboe lacked clarity and comprehensiveness.
Valkyrie has been striving to secure approval for a spot BTC ETF from the SEC, with attempts dating back to 2021. While the firm successfully launched an ETF linked to Bitcoin futures in October 2021, the SEC has so far not given its approval for any spot ETF tied to cryptocurrencies. In fact, numerous companies have sought to introduce such crypto investment vehicles in the past few years, yet none have received the regulatory green light.
One notable example was Grayscale Investments, which faced the SEC’s denial of its spot Bitcoin ETF in June 2022. Subsequently, Grayscale filed a lawsuit against the regulator, alleging inconsistent treatment of similar investment vehicles.
The recent influx of applications for ETFs involving surveillance-sharing agreements reflects growing interest from asset managers and investors in gaining exposure to cryptocurrencies through traditional investment channels. By collaborating with reputable platforms like Coinbase, these ETF applicants aim to enhance the transparency and integrity of their offerings, thus potentially increasing their chances of approval.
The SEC’s stance on crypto ETFs has evolved over time, and the inclusion of surveillance-sharing arrangements signals a willingness to consider measures that ensure market oversight and investor protection. By granting Nasdaq access to data on spot Bitcoin trades, the agreement with Coinbase may provide the SEC with a more comprehensive view of the market, potentially addressing concerns related to market manipulation and price volatility.
While the regulatory landscape for crypto ETFs remains complex and uncertain, the resubmission of Valkyrie’s application with the Nasdaq and Coinbase partnership demonstrates the industry’s determination to bridge the gap between traditional finance and the rapidly expanding world of cryptocurrencies. As the SEC reviews these applications with a heightened focus on surveillance mechanisms, asset managers are hopeful that the doors to a new era of crypto investment opportunities will soon open. Investors and industry stakeholders eagerly await the SEC’s decision on these groundbreaking investment vehicles that could further legitimize and solidify the presence of cryptocurrencies in mainstream finance.
