Such agreements are “key” to addressing the SEC’s concerns of price manipulation, executives have claimed.
With $10 trillion assets under management, BlackRock has taken centre stage of the Bitcoin ETF show over the past few weeks. American asset managing firm ARK Invest however is confident that if the US Securities and Exchange Commission (SEC) approves any Bitcoin ETFs, they’re first in line.
The firm filed their most recent ETF application two months before BlackRock, and they’ve now revised their application to increase their chances of approval.
Taking note from BlackRock, the world’s largest asset manager, ARK has amended its filing to include a surveillance sharing agreement.
Good to know
A surveillance sharing agreement (SSA) is a formal agreement between market participants, such as exchanges or trading platforms, and regulatory authorities. Its purpose is to facilitate the sharing of relevant data and information in order to prevent potential market manipulation, detect illicit activities, and ensure compliance with regulatory requirements. Under an SSA, market participants provide regulatory authorities with access to various types of data, including trading activity, customer identification information, and clearing activity.
The filing observes that the SEC has historically based similar decisions on whether the listing exchange has in place a “comprehensive surveillance sharing agreement” with a sizable regulated market.
Historically, Bitcoin ETFs have been rejected due to fears of price manipulation. It’s thought that the presence of surveillance agreements, i.e. an agreement where market participants share relevant information with regulatory authorities, will help address these concerns.
Multiple crypto executives have expressed optimism that such agreements will be the “key” to long-awaited SEC approval. Speaking with CNBC on June 26, Jeremy Schwartz, Global Chief Investment Officer at WisdomTree, a key ETF applicant, said that surveillance agreements will help the SEC feel “more comfortable” with the concern of market manipulation.
He pointed out that the SEC previously approved Futures ETFs, which are also based on Spot prices, because they share relevant information with the SEC.
What would approval mean for Bitcoin?
The succession of new Bitcoin ETF filings demonstrates recognition of the growing importance of cryptocurrencies, potentially leading to major institutional investment and broader adoption. Approval would increase liquidity and likely have a positive impact on Bitcoin’s price.
Since BlackRock filed its application, Bitcoin has held steady above $30,000 – the strongest price action we’ve seen all year.
There are however concerns that listing a Bitcoin ETF on a regulated, centralised exchange runs the risk of introducing centralization and diverging from Bitcoin’s decentralized nature.
A decision on the ETF is expected by 2024, possibly after the presidential election.
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