Exchange operator Cboe on Friday refiled an application with the U.S. Securities and Exchange Commission (SEC) to launch a bitcoin exchange-traded fund (ETF) by asset manager Fidelity. In the filing, Cboe said it would work with global crypto exchange Coinbase to prevent any market manipulation in the process.
The SEC had told Cboe that its recent filing to list and trade a spot bitcoin ETF from Fidelity was unclear and incomplete. The same concerns were raised with Nasdaq regarding a recent filing for a spot bitcoin ETF from BlackRock. The key issue was that the exchanges had not named the crypto-trading platforms with which it planned to enter into surveillance-sharing agreements to help detect fraud in the underlying bitcoin markets.
Cboe also refiled listing applications for bitcoin ETFs by WisdomTree, VanEck, and a joint effort from Invesco and Galaxy. It stated in all filings that it plans to enter into a surveillance-sharing agreement with Coinbase.
The SEC, Cboe, Nasdaq, Fidelity, and BlackRock declined to comment, while Coinbase was not immediately available for comment. Coinbase had previously been sued by the SEC for failing to register as an exchange.
John Reed Stark, a former chief of the SEC’s Office of Internet Enforcement, said of the cryptocurrency market, “The marketplace is not only not transparent and not audited but it’s also, according to the SEC, rife with manipulation.”
The filings for bitcoin ETFs by BlackRock and Fidelity sent the price of bitcoin soaring more than 20% since June 15 to one-year highs. This was in contrast to earlier in the year when a series of crypto company meltdowns and the sudden collapse of exchange FTX in late 2022 soured investor sentiment.
Coinbase will ask a judge to toss the SEC lawsuit, arguing the regulator lacks authority to pursue civil claims because the crypto assets trading on its platform are not “investment contracts,” and thus not securities. The SEC is also suing Binance, alleging that the world’s biggest crypto-trading platform is operating a “web of deception.”
Ed Moya, senior market analyst at Oanda, said the fact that the price of bitcoin held up well after the SEC asked for more information on the bitcoin ETF filings suggested sentiment is not turning bearish. He said of the bitcoin ETF applications, “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.”
The SEC has rejected dozens of spot bitcoin ETF applications in recent years, including one from Fidelity in January 2022. In all the cases, it said the filings did not meet the standards designed to prevent fraudulent and manipulative practices and protect investors and the public interest.
Reporting by Carolina Mandl and John McCrank in New York, and Manya Saini in Bengaluru; Additional reporting and editing by Michelle Price, Shinjini Ganguli, Alexander Smith and David Gregorio. Our Standards: The Thomson Reuters Trust Principles.
