Crypto exchange Coinbase named as a partner in bitcoin ETF applications

Yesterday, the market reacted quite violently when the news came out that the bitcoin (BTC) exchange-traded funds (ETF) applications had to be reviewed as no specific crypto exchange was listed for the so-called surveillance sharing agreement (SSI). Meanwhile, the Chicago Board Options Exchange (CBOE) has named Coinbase as a partner for its list of bitcoin ETF attempts.

Apply for Bitcoin ETF

A huge laundry list of asset managers have recently appeared in the Bitcoin news as well as their attempt to get a spot ETF for Bitcoin in the US market. Big boys like BlackRock, WisdomTree, VanEck, Ark Invest, Invesco and Fidelity are all in the running to launch a bitcoin ETF. It would be a first in that regard since the US Securities and Exchange Commission (SEC) has so far formed a blockade every time.

An ETF is by definition a security, which means that it must first be approved by the SEC before it can actually be traded on the exchange. The exchanges on which the bitcoin ETFs should eventually be listed are therefore the ones that submit the application to the regulator. While BlackRock has opted for Nasdaq, all other filings go through the CBOE.

CBOE chooses Coinbase

The surveillance-sharing agreement is an agreement that gives the exchange on which the ETF is traded the right to request all information regarding the activity of investors in the fund. It is intended to discourage fraud and market manipulation. Yesterday, the SEC informed both Nasdaq and CBOE that their filings were “inadequate” due to the lack of a specific partner for the surveillance-sharing agreement.

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CBOE has now received new applications submitted in which it names the American listed crypto exchange Coinbase as its partner. It additionally says that Coinbase’s platform “represents a significant portion of US-based and USD-denominated bitcoin trading.”

The SEC has in the past called for surveillance-sharing agreements with markets of “significant size,” arguing that this is necessary to prevent market manipulation or other undesirable behavior and protect consumers as a result.

The lack of these agreements therefore played a major role in many of the previous rejections by the financial regulator.

The SEC must now formally acknowledge that it is reviewing the applications before the initial 45-day review period begins. When the applications are published in the Federal Registry can the countdown actually begin. However, the SEC may extend the review period to a maximum of 240 days.

In the past, the watchdog used the full whack every time and so it is unlikely that it will come to a judgment faster now.

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