Valkyrie Investments’ spot-Bitcoin exchange-traded fund application has been refiled, with Coinbase declared as the exchange that would serve as its surveillance-sharing partner.
With Valkyrie’s resubmission, all of the recent applications sent back by the SEC have been amended and refiled.
Nasdaq and Cboe Global Markets are the two main stock exchanges where these funds are going to be listed, and both have entered an agreement with Coinbase to cover the regulator’s surveillance requirements.
According to the Nasdaq filings:
“On June 30, 2023, the Exchange executed a term sheet with Coinbase, Inc. to enter into a surveillance-sharing agreement (“Spot BTC SSA”).”
Amendments
The SEC had sent the applications back with the reasoning that they lacked the comprehensiveness needed for a proper review and requested the exchanges to add more clarity around the surveillance-sharing agreement (SSA).
Primarily the watchdog wanted the applications to specify which spot Bitcoin exchange would serve as a surveillance-sharing partner.
The applications — including BlackRock’s — were initially filed without specifying such a partner and instead stated that the SSA would be entered with the Chicago Mercantile Exchange — which operates a Bitcoin futures market.
The exchanges further claimed that their membership with the Intermarket Surveillance Group was sufficient to fulfill the watchdog’s surveillance requirements.
Shifting sentiment?
Valkyrie’s filing is a major pivot in the company’s stance toward spot Bitcoin ETFs and could be a sign of shifting sentiment among regulators and the traditional financial industry.
The company is one of the few that operates Bitcoin-related funds, albeit based on futures, and has previously stated that it did not expect the SEC to approve a spot ETF until crypto exchanges are brought under the regulatory net.
However, the crypto industry’s attempts to glean information and guidance about how they can do so have mostly been snubbed by the SEC over the ensuing months. The cold shoulder approach so far seems to have culminated in legal action against two of the biggest crypto exchanges in the world.
Valkyrie Funds CEO Leah Wald said in 2022 that the SEC has been rejecting spot ETF applications because crypto exchanges are unregulated and lack proper investor protection mechanisms.
She added that until this changes, the regulator is unlikely to approve any products based on spot-Bitcoin prices. Wald also said:
“Since the beginning of this process, we have largely agreed with the agency that it would be challenging to put an unregulated asset into a regulated wrapper.”
The recent application goes counter to that narrative, considering that crypto remains a largely unregulated asset.
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