1-7-2023 (LONDON) Cboe, the exchange operator, has resubmitted an application to the U.S. Securities and Exchange Commission (SEC) to launch a bitcoin exchange-traded fund (ETF) in collaboration with asset manager Fidelity. The move comes as Cboe aims to address concerns raised by the SEC regarding its previous filing, which sought to list and trade a spot bitcoin ETF from Fidelity. According to a source familiar with the matter, the SEC deemed the filing unclear and incomplete, a concern shared by the regulator regarding Nasdaq’s recent filing for a spot bitcoin ETF from BlackRock.
A major issue highlighted by the SEC was the omission of the crypto-trading platforms with which the exchanges planned to establish surveillance-sharing agreements to detect fraud in the underlying bitcoin markets.
On Friday, Cboe also resubmitted listing applications with the SEC for bitcoin ETFs offered by WisdomTree, VanEck, and a joint effort by Invesco and Galaxy. In all of these filings, Cboe stated its intention to enter into a surveillance-sharing agreement with Coinbase, a prominent global crypto exchange.
When approached for comments, the SEC, Cboe, Nasdaq, Fidelity, and BlackRock declined to provide any statements. Coinbase was also unavailable for immediate comment.
Earlier this month, the SEC filed a lawsuit against Coinbase for its failure to register as an exchange. In Cboe’s filing for the Fidelity bitcoin ETF, it was revealed that Coinbase’s platform accounted for approximately 50% of U.S. dollar-bitcoin trading in May.
Coinbase, in a letter submitted to the Manhattan federal court late on Wednesday, stated its intention to request the dismissal of the SEC lawsuit. Coinbase argues that the regulator lacks the authority to pursue civil claims since the crypto assets traded on its platform do not qualify as “investment contracts” and are thus not considered securities.
In addition to Coinbase, the SEC has also filed a lawsuit against Binance, alleging that the world’s largest crypto-trading platform is engaged in a “web of deception.”
John Reed Stark, a former chief of the SEC’s Office of Internet Enforcement, described the cryptocurrency market as lacking transparency and proper auditing. He emphasized the SEC’s claim that the market is rife with manipulation.
The recent filings for bitcoin ETFs by BlackRock and Fidelity have resulted in the price of bitcoin surging more than 20% since June 15, reaching one-year highs.
Throughout this year, cryptocurrency prices have faced downward pressure due to several crypto company meltdowns, including the sudden collapse of FTX exchange in late 2022, which dampened investor sentiment.
The fact that the price of bitcoin has remained resilient following the SEC’s request for additional information on the bitcoin ETF filings indicates that sentiment is not turning bearish, according to Ed Moya, senior market analyst at Oanda.
Moya commented on the SEC’s stance on bitcoin ETF applications, stating, “It’s not surprising to hear that the SEC is pushing back a little bit. I don’t think it was realistic to expect that they were going to immediately concede and grant a quick approval.”
Over the years, the SEC has rejected numerous spot bitcoin ETF applications, including one from Fidelity in January 2022. The regulator consistently maintains that these filings fail to meet the required standards for preventing fraudulent and manipulative practices and safeguarding investor interests and public welfare.
