Coinbase Named As Surveillance Partner For Fidelity And Other Bitcoin ETFs

By Kevin • July 3, 2023 12:41 pm • Comments

Cboe’s BZX Exchange just revealed that it has named Coinbase as a surveillance partner for its recent spot Bitcoin ETF filing with the SEC.

This was done as part of a refiling that the exchange did after the SEC announced that the filings were considered “inaccurate”.

Most of the other spot Bitcoin ETF filings from other parties such as Fidelity and BlackRock have also resubmitted their filings in response to the SEC.

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As of now, the SEC still has not officially stated that it has acknowledged and is reviewing the applications, but it has been known that the process could take up to a total of 240 days.

As for why Coinbase was chosen as a surveillance partner, this is likely due to the fact that Coinbase represents a significant amount of crypto trading activity within the US.

CoinDesk reports:

Fidelity, WisdomTree, VanEck, ARK Invest, Galaxy/Invesco and BlackRock all filed for spot bitcoin ETFs over the past few weeks, hoping to succeed at launching a product the U.S. Securities and Exchange Commission (SEC) has rejected for years. While BlackRock filed with Nasdaq, the other companies are working with Cboe.

On Friday, the SEC told some both Nasdaq and Cboe that their applications were “inadequate” because they didn’t name the market that the fund sponsors are working with on their surveillance-sharing agreements, according to the Wall Street Journal.

In its refiled applications, Cboe said Coinbase’s platform “represents a substantial portion of U.S.-based and USD denominated Bitcoin trading” as it named the U.S. crypto exchange as its partner for these surveillance-sharing agreements.

The purpose of a surveillance partner is apparently so that it can help prevent market manipulation and protect consumers.

The SEC is saying that this is one of the main reasons why they had rejected all past spot Bitcoin ETF filings which is interesting.

With that being said, this is quite the difficult request to satisfy given that crypto trading activity is spread out among multiple exchanges and is not centralized in one place.

It is also unknown if the new filings will be accepted given that the SEC is in the middle of a potential long lawsuit with Coinbase and other crypto exchanges.

The SEC still continues to accuse many digital assets as being considered securities.

Bitcoin.com concludes:

To date, the U.S. regulatory watchdog remains skeptical of the spot bitcoin ETF sponsors’ ability to safeguard the funds against manipulation and ensure investor protection. D

espite granting approval for multiple futures exchange-traded funds, the SEC recently greenlit a bitcoin futures ETF with leverage.

Interestingly, the latest ETF applications and Blackrock’s filing have designated Coinbase as a surveillance-sharing agreement (SSA) partner.

However, it’s important to note that the San Francisco-based firm is currently entangled in a legal dispute with the securities regulator, as the SEC filed a lawsuit against the exchange.

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