Upland: Berlin is here!

On June 30, reports surfaced that the U.S. Securities and Exchange Commission (SEC) has returned a recent spot Bitcoin Exchange Traded Fund (ETF) application. Applications filed by the exchange on behalf of BlackRock, Fidelity Investments and others were deemed not “clear or comprehensive enough”.

An anonymous source cited by wall street journal He shared that the application failed to identify spot bitcoin exchanges that have “surveillance sharing agreements” (SSAs) with Nasdaq and Cboe. The agreement is a prerequisite for his SEC and is intended to prevent fraud and manipulation in the underlying market of the asset.

Cross-market monitoring group

according to Documents to be submittedNeither the Nasdaq nor the Chicago Board Options Exchange (Cboe Global Markets), which plans to list a number of recently-filed spot bitcoin ETFs, have expressed any intention to enter the spot cryptocurrency exchange and SSA. rice field.

Instead, it announced its intention to enter into an SSA with Chicago Mercantile Exchange (CME), a sizable Bitcoin futures market, through its membership of the Intermarket Surveillance Group (ISG).

ISG members include nearly all major stock exchanges in the traditional financial industry. It is a self-regulatory body whose primary purpose is to prevent fraud and manipulation by sharing information. The filing also states that both exchanges will use the S&P Global Bitcoin Index and the Bitcoin futures market to track price performance.

The exchange said that because the Bitcoin futures market is the “major market for Bitcoin price formation,” actors who try to manipulate the price of Bitcoin will be forced to participate in the futures market and will be subject to surveillance. claim.

Because the CME has taken appropriate steps to detect fraud and manipulation in its markets, SSAs with ISG membership have priority and should be sufficient to satisfy the SEC’s concerns.

According to one of them Documents to be submitted:

“The European Commission has historically argued that joint membership of the Intermarket Surveillance Group (“ISG”) constitutes such a surveillance sharing arrangement.

The exchange also claims that the underlying spot market for commodities and currencies such as gold remains largely unregulated. However, it does not prevent ETFs tied to these assets from entering the market, as there are ways to detect manipulation based on futures.

They argue that the gold ETF precedent should also apply to Bitcoin, which regulators seem to treat most commonly as a commodity.

Further fixes?

Based on feedback from the SEC, Cboe has publicly authorized resubmitting its application for the ETF to be listed in the next few days, which would require further changes to the SSA terms and specs for spot cryptocurrency exchanges. could mean.

However, the options are limited, and given that it is currently involved in a lawsuit with the SEC, choosing Coinbase, which houses most of these applications, could backfire.

Despite the various arguments in the filing, it is unclear whether simply adding a spot cryptocurrency exchange to the filing will be enough to satisfy the SEC.

By Jules

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