In the continuous tug-of-war for the much-anticipated spot bitcoin exchange-traded (ETF) fund, the Chicago Board Options Exchange’s BZX Exchange has refiled its application, marking Coinbase as its comrade under a surveillance-sharing agreement. Notably, other financial heavyweights such as Fidelity, WisdomTree, VanEck, Galaxy/Invesco and BlackRock are also in the race, all having filed for spot bitcoin ETFs in recent weeks. Yet, the efforts are met with stringent scrutiny from the U.S Securities and Exchange Commission (SEC), pointing a stinging retort of ‘inadequacy’ at applications.
A key reason for this stern stance from the SEC lies in the lack of specific markets named in the fund sponsors’ surveillance-sharing agreements. It’s worth understanding that the SEC has been quite vocal about these agreements being with markets of ‘significant size’, and for valid reasons. Aimed at curbing market manipulation and other undesirable behaviours, these agreements, the SEC argues, act as essential safeguards for consumer interests. Indeed, it was the absence of such agreements that spelled the decline of many preceding bitcoin ETF applications.
So, where does the crypto community stand in this conundrum? The answer isn’t a simple one. While crypto players are chomping at the bit to breach the traditional finance sphere with their blockchain-based assets, the regulatory authorities are equally resolute in their responsibility to ensure market stability and protection for consumers. It’s clear that the stand-off as it currently exists only starves the market of a potentially influential product – a spot bitcoin ETF.
On the flip side, the refusal of such applications isn’t entirely without merit. Without robust surveillance and regulatory oversight, there’s a possible risk of market volatility and manipulation, as the SEC rightly argues. However, these concerns should not necessarily be a death sentence for the idea of a bitcoin ETF. Rather, it should spur financial institutions and crypto exchanges to work jointly to design transparent, robust, and ‘significant’ surveillance-sharing agreements.
In conclusion, while the quest continues for a spot bitcoin ETF application that meets the SEC’s stringent expectations, the overall sentiment in the industry is sanguine. It recognizes the need for robust market surveillance agreements and is working toward that end, with many taking the SEC’s criticism as constructive feedback. It is this resilience and adaptability that will likely pave the way for a future where a bitcoin ETF is part of the mainstream investment landscape.
Source: Coindesk
