Coinbase partners with Fidelity and other Bitcoin ETFs for monitoring

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Source: Pexels / Jonathan Borba

Last week, a Wall Street Journal (WSJ) report exposed SEC insider dissatisfaction with the recent batch of spot bitcoin ETF applications from top financial institutions like Blackrock, Wisdomtree, Valkyrie, Fidelity, Ark Investments and Invesco.

Following this revelation, four of the companies mentioned, namely Fidelity, Vaneck, Invesco and Wisdomtree took action and resubmitted their documents.

WSJ contributor Vicky Ge Huang, citing “people familiar with the matter,” revealed that the regulator deemed ETF registrations inadequate, notifying Cboe and Nasdaq of the development.

In response to comments from the SEC, Cboe, an exchange operator, confirmed its intention to resubmit its bitcoin ETF spot filings.

True to its word, Cboe worked with global crypto exchange Coinbase to prevent potential market manipulation and made necessary updates and changes to filings originally filed by Fidelity, Vaneck, Invesco, and Wisdomtree.

On Friday, Cboe formally completed its application with the U.S. securities regulator to launch a bitcoin exchange-traded fund managed by Fidelity, addressing SEC concerns and clarifying any previous ambiguities or incompleteness in their filing.

The aim is to ensure a smooth and compliant process for launching the ETF while preventing market manipulation.

Coinbase officially designated as monitoring sharing partner; Blackrock and Ark Disengage

A significant update came on Friday when Coinbase officially named a Surveillance Sharing Agreement (SSA) partner.

It’s worth mentioning that while Blackrock and Ark haven’t refiled, Blackrock had previously listed Coinbase as its chosen SSA partner.

In its amended requests, Cboe pointed out that Coinbase’s platform plays an important role in US-based, USD-denominated Bitcoin trading.

According to information from Cboe’s Fidelity bitcoin ETF filing, Coinbase’s platform accounted for about half of US dollar bitcoin trading in May.

“The BTC SSA Spot [surveillance-sharing agreement] should encompass the essential features of a shared oversight arrangement between two ISG members. This would grant the exchange additional access to data on Bitcoin spot transactions occurring on Coinbase. The Exchange will use this data as part of its commodity-based trust equity monitoring program, similar to how exchanges exchange information within ISG,” the filing said.

SEC Pushes for Supervisory Sharing Agreements, Bitcoin ETFs Denied

The SEC has advocated the establishment of surveillance-sharing agreements with major markets, saying such agreements prevent market manipulation and protect consumers. This lack of cooperation significantly influenced the SEC’s rejection of various Bitcoin ETF applications.

“Not only is the market not transparent and unaudited, it is also, according to the SEC, rife with manipulation,” said John Reed Stark, former SEC Bureau Chief for Enforcement. of Internet law, about the cryptocurrency market.

As for the current situation, the SEC has not yet formally acknowledged the review of its application.

Once the filings are published in the Federal Register, which serves as the national logbook, an initial 45-day review period will begin. However, this period can be extended up to 240 days.

When approached for comment on these matters, the SEC, Cboe, Nasdaq, Fidelity and BlackRock declined to provide statements, while Coinbase was not available for immediate comment.

Recently filed bitcoin ETF applications by BlackRock and Fidelity have contributed to a significant rise in bitcoin prices, rising more than 20% since June 15 to reach year-to-date highs.

The cryptocurrency market faced challenges earlier in the year due to the collapse of several crypto companies, such as the sudden shutdown of the FTX exchange at the end of 2022, which negatively impacted investor sentiment.

Despite the SEC’s request for additional information on bitcoin ETF filings, the price of bitcoin remained resilient, indicating that sentiment has not turned bearish.

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