The SEC’s determination that recent filings for spot Bitcoin ETFs are inadequate highlights the challenges and meticulous scrutiny surrounding the launch of such a financial product in the United States.
The dream of a spot Bitcoin exchange-traded fund (ETF) in the United States appears to face an even lengthier delay, as the Securities and Exchange Commission (SEC) has deemed recent filings by prominent asset managers like BlackRock, ARK Invest, Fidelity, and others as inadequately clear and comprehensive.
This regulatory assessment implies that investors may have to exercise further patience before witnessing the emergence of this groundbreaking financial instrument.
The SEC communicated to both Nasdaq and the Chicago Board Options Exchange (Cboe) that their filings for spot Bitcoin ETFs lacked the necessary level of clarity and comprehensiveness, according to The Wall Street Journal. These exchanges serve as representatives for asset managers during the filing process for this financial product.
From the SEC’s perspective, the exchanges should have explicitly named the spot Bitcoin exchange with which they intend to establish a “surveillance-sharing agreement” or provided ample information about the intricacies of these surveillance arrangements. However, asset managers have the opportunity to resubmit their filings once they have clarified and rectified these informational deficiencies.
There has been a flurry of applications submitted in recent weeks in the wake of BlackRock’s entry into the race to launch the first spot Bitcoin ETF on Wall Street. BlackRock’s application introduced the concept of a “surveillance sharing agreement,” which entails the sharing of market trading and clearing activity information among relevant entities to mitigate the potential risks associated with market manipulation.
Following BlackRock’s lead, ARK Invest and 21Shares amended their own applications to incorporate similar surveillance agreements. Other asset managers such as Invesco, WisdomTree, Valkyrie, and Fidelity have also either resubmitted or modified their applications in recent days. Among them, ARK Invest reportedly stands as a frontrunner in this fiercely competitive race.
ETFs typically track specific indices and are commonly traded on exchanges. In the realm of cryptocurrencies, a cryptocurrency ETF refers to a fund that tracks the price of one or multiple digital tokens and encompasses various cryptocurrencies within its portfolio.
Despite facing denials from the SEC since 2017, spot Bitcoin ETFs have already become available in Canada showcasing the potential and growing interest surrounding this innovative investment avenue.
The road to regulatory approval remains arduous, yet the collective determination of asset managers and exchanges to provide institutional investors with access to this transformative investment vehicle remains undeterred.