The Securities and Exchange Commission (SEC) in the United States has deemed the recent applications for a spot Bitcoin exchange-traded fund (ETF) inadequate, which may result in a longer wait for its approval. The SEC specifically pointed out to the Nasdaq and the Chicago Board Options Exchange (Cboe), representing asset managers in the filing process, that their filings lacked clarity and comprehensiveness, according to a report by the Wall Street Journal.
The SEC’s primary concern was that the exchanges did not identify the spot Bitcoin exchange with which they would establish a surveillance-sharing agreement. Additionally, the regulatory body criticized the lack of detailed information regarding the specifics of those surveillance arrangements. Despite this setback, asset managers have the option to amend and resubmit their filings after addressing these issues.
The recent surge in applications for spot Bitcoin ETFs followed BlackRock’s decision to join the list of companies seeking to introduce the first spot Bitcoin ETF on Wall Street. BlackRock’s filing included a surveillance-sharing agreement that facilitates the exchange of information about market trading and clearing activities among entities, aiming to prevent potential market manipulation. Following BlackRock’s lead, ARK Invest and 21Shares amended their applications to include similar surveillance agreements. Other asset managers like Invesco, WisdomTree, Valkyrie, and Fidelity have also either refiled or modified their applications in recent days. Among these contenders, ARK Invest is said to be in the lead.
ETFs are financial products that track a specific index and are typically traded on exchanges. In the cryptocurrency market, a cryptocurrency ETF refers to a fund that follows the price of one or multiple digital tokens, consisting of various cryptocurrencies.
It is worth noting that spot Bitcoin ETFs have faced denials from the SEC since 2017. However, in Canada, these financial products are already available. Three significant funds, namely Purpose Bitcoin, 3iQ Coinshares, and CI Galaxy Bitcoin, all directly invest in spot Bitcoin in the Canadian market.
The SEC’s labeling of the recent applications as inadequate may delay the arrival of a spot Bitcoin ETF in the US market. However, asset managers have the opportunity to strengthen their filings and address the SEC’s concerns before resubmitting them. As the race for the first spot Bitcoin ETF in the US intensifies, it remains to be seen which asset manager will successfully navigate the regulatory obstacles and launch this highly anticipated financial product.
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