BlackRock (NYSE:BLK) has taken a step closer to launching the first bitcoin spot ETF after submitting a revised application to the SEC. To address the regulator’s concerns, the asset management firm has established a surveillance agreement with Coinbase (NASDAQ:COIN), the leading US-based crypto exchange.
The new filing states that BlackRock’s proposed exchange-traded fund (ETF) will be reliant on Coinbase to serve as the custodian and to provide spot market data for pricing. The asset manager is also setting up a bilateral surveillance-sharing agreement between Nasdaq and Coinbase, known as the Spot BTC SSA, to complement the exchange’s existing market surveillance program.
News of BlackRock’s application for a bitcoin spot ETF has seen the cryptocurrency’s price surge by 20% since the initial report on June 15. Despite the SEC finding BlackRock’s initial application inadequate on June 30, the positive market sentiment has persisted.
The SEC has raised concerns about potential fraud or manipulation in the spot market, making registering a bitcoin spot ETF challenging. Although no application for such an ETF has been approved yet, the SEC has approved four bitcoin ETFs related to futures trading, emphasizing the distinction between the two types of ETFs.
ETFs enable investors to gain exposure to various assets without direct ownership, including commodities, currencies, stocks, or bonds. For a bitcoin ETF, this means investors can participate in the price movement of Bitcoin without possessing the cryptocurrency itself. Instead, they can purchase shares that track the digital asset’s value.
BlackRock’s revised application has seen other companies enter the race by filing their own ETF applications. Fidelity, which has partnered with Coinbase for similar services, saw its exchange operator, Cboe, modify its application for a Bitcoin spot ETF on the same day as the Wall Street Journal report.