BlackRock may have found a path to SEC approval for a spot Bitcoin ETF

In a notable development for the cryptocurrency industry, BlackRock, the world's largest asset manager, has filed an application with the U.S. Securities and Exchange Commission (SEC) for the iShares Bitcoin Trust. This latest attempt at a spot Bitcoin exchange-traded fund (ETF) may have a higher chance of approval, thanks to the inclusion of a surveillance-sharing agreement. This agreement, involving Nasdaq and a spot trading platform, aims to address concerns about market manipulation associated with Bitcoin.

Addressing Market Manipulation Concerns

BlackRock's proposal stands out from previous attempts by other fund managers due to the promise of a surveillance-sharing agreement between exchanges. The Nasdaq 19b-4 filing reveals that Nasdaq, where the proposed ETF will be listed, plans to collaborate with a spot trading platform operator for Bitcoin. This agreement allows for the sharing of critical market trading activity, clearing activity, and customer identification information. By actively monitoring and sharing this data, the risk of market manipulation can be significantly reduced.

Significance of the Surveillance-Sharing Agreement

Graeme Moore, Head of Tokenization at the Polymesh Association, believes that the surveillance-sharing agreement, named the "Spot BTC SSA," is a key factor that distinguishes BlackRock's application. Moore states that the SEC has consistently expressed concerns about market manipulation in relation to Bitcoin prices, and previous rejections have been attributed to this issue. The SEC questions the ability of exchanges like Coinbase to prevent fraudulent and manipulative acts due to their lack of regulatory oversight. By establishing a surveillance-sharing agreement, BlackRock aims to provide the SEC with assurance and demonstrate its commitment to addressing these concerns.

Debating the Necessity of the Agreement

While BlackRock's move is seen as a positive step towards gaining SEC approval, some industry experts question the necessity of such an agreement. Dave Weisberger, CEO & Co-Founder of CoinRoutes, argues that public data feeds from major exchanges like Kraken, Coinbase, ItBit, Lmax, and Bitstamp already offer comprehensive trade and order information. Weisberger suggests that the SEC could access this data directly or hire third-party services to obtain it. By analyzing every trade and order, the SEC would have the ability to identify manipulative trading activities. This raises the question of whether a surveillance-sharing agreement is redundant given the availability of public data feeds.

SEC's Stance on Surveillance-Sharing Agreements

The SEC has previously emphasized the importance of surveillance-sharing agreements for exchanges listing Bitcoin-based exchange-traded products (ETPs). In a notice issued in January, the agency stated that an exchange can fulfill its obligations under the Exchange Act by demonstrating a comprehensive surveillance-sharing agreement with a regulated market of significant size, specifically related to the underlying Bitcoin assets. This indicates that the SEC acknowledges the value of surveillance mechanisms in ensuring market integrity.

Conclusion

BlackRock's iShares Bitcoin Trust application, which includes a surveillance-sharing agreement with Nasdaq and a spot trading platform, represents a significant step towards obtaining SEC approval for a spot Bitcoin ETF. By addressing the SEC's concerns about market manipulation, BlackRock aims to pave the way for the introduction of a regulated Bitcoin investment product in the United States. While opinions differ on the necessity of the surveillance-sharing agreement, the move demonstrates the industry's commitment to transparency and market integrity. As the SEC evaluates the proposal, the outcome will be closely watched by investors and cryptocurrency enthusiasts alike, as it has the potential to shape the future of digital asset investments in the United States. Follow https://uniultra.xyz/ for more updates on crypto market.