In a recent development, the United States Securities and Exchange Commission (SEC) has labeled the filings of prominent asset managers, including BlackRock, ARK Invest, Fidelity, and others, as inadequate for spot Bitcoin exchange-traded funds (ETFs). The SEC expressed concerns about the lack of clarity and comprehensiveness in the applications, urging the exchanges representing these asset managers, such as Nasdaq and the Chicago Board Options Exchange (Cboe), to address the deficiencies.
The primary issue highlighted by the SEC relates to the absence of explicit mention or detailed information regarding “surveillance-sharing agreements” with spot Bitcoin exchanges. The SEC believes that these agreements are crucial for monitoring market activities and preventing potential manipulation. However, the asset managers have the opportunity to resubmit their filings after providing the necessary clarifications.
Various companies, including BlackRock, have recently filed applications for the first spot Bitcoin ETF on Wall Street, sparking a flurry of similar proposals. BlackRock’s application introduced a “surveillance sharing agreement,” which involves sharing information on trading and clearing activities among entities to mitigate the risks of market manipulation. Following BlackRock’s lead, ARK Invest and 21Shares modified their third application to include a comparable surveillance agreement, enhancing their chances in this competitive race. Other asset managers like Invesco, WisdomTree, Valkyrie, and Fidelity have also refiled or amended their applications in the hope of gaining SEC approval. Among them, ARK Invest reportedly holds a favorable position as a front-runner.
Unlike the United States, Canada has already approved spot Bitcoin ETFs. Notably, significant funds in Canada, such as Purpose Bitcoin, 3iQ Coinshares, and CI Galaxy Bitcoin, are directly invested in spot Bitcoin. However, the SEC has consistently denied spot Bitcoin ETFs since 2017, while their Canadian counterparts have made progress.
The delay in the approval of spot Bitcoin ETFs in the US market hampers investors’ access to this investment product. ETFs are widely recognized financial instruments that track specific indices and are traded on exchanges. In the cryptocurrency market, a cryptocurrency ETF comprises multiple digital tokens and enables diversified exposure to various cryptocurrencies.
As stakeholders eagerly await regulatory clarity from the SEC, the future introduction of spot Bitcoin ETFs in the United States remains uncertain. The availability of these products would not only enhance investor options but also potentially foster broader adoption and acceptance of Bitcoin within the mainstream financial industry.