Coinbase will now join market surveillance sharing for Cboe ETFs even as market sentiments suggest BlackRock will win SEC approval.
Shares of crypto exchange Coinbase Global Inc (NASDAQ: COIN) rose 16% on Tuesday on news that the firm reached a surveillance agreement with Cboe’s BZX Exchange. Coinbase has agreed to join the BZX Exchange in a surveillance-sharing agreement (SSA) for five Cboe spot Bitcoin exchange-traded funds (ETF).
Coinbase shares reached a $92.15 high but eventually fell, closing at $89.15 after a 24-hour increase of 9.78%. According to data from MarketWatch, COIN has gained 27% in the past three months, more than 70% in the past month, and over 64% in the last year. Since January, investors have seen an impressive 151% climb in COIN.
According to an amendment submitted to the United States Securities and Exchange Commission (SEC), the Cboe BZX Exchange reached an agreement with Coinbase on June 21. The amendment states that the SSA ensures Cboe’s BZX Exchange will access Coinbase data on spot BTC trades as required. The amendment noted:
“…the Exchange expects to receive market data for orders and trades from Coinbase, which it will utilize in surveillance of the trading of Commodity-Based Trust Shares.”
The terms of the agreement also allow the BZX Exchange to ask Coinbase for more information as may be necessary for market surveillance and fraud prevention:
“In addition, the Exchange can request further information from Coinbase related to spot Bitcoin trading activity on the Coinbase exchange platform, if the Exchange determines that such information would be necessary to detect and investigate potential manipulation in the trading of the Commodity-Based Trust Shares.”
Cboe and Coinbase’s SSA
The SSA is slowly becoming popular among companies applying for spot Bitcoin ETFs. Asset management giant BlackRock (NYSE: BLK) submitted an application for the iShares Bitcoin Trust ETF in June. The application stated BlackRock intends to help clients invest in Bitcoin without direct access, and named Bank of New York Mellon (BNY Mellon) as the cash custodian. Later, the Nasdaq exchange submitted a new filing on BlackRock’s behalf and included an SSA with Coinbase.
Not long after, the Cboe BZX Exchange amended a filing for the ARK 21Shares ETF from ARK Invest and 21Shares. The new filing also includes provisions for an SSA to help detect, investigate, and prevent fraud and market manipulation.
The SEC has rejected all applications for a spot Bitcoin ETF since the first one was submitted by the Winklevoss twins in 2013. Each time, the SEC based its disapproval on proposals containing inadequate fraud prevention and market manipulation measures. However, there is now a lot of speculation that the SEC may greenlight a proposal this year.
The general market sentiment seems to support the possibility of approval. According to Dave Weisberger, the CEO, and co-founder of CoinRoutes, an algorithmic trading platform, BlackRock is “likely” to wear the crown. Weisberger is bullish on BlackRock’s chances because the company has “pretty much undercut all the SEC’s arguments”.