BlackRock’s most recent Bitcoin ETF filing includes Coinbase: surveillance agreement

Breaking news in the crypto sector: BlackRock recently unveiled the Bitcoin ETF filing involving Coinbase as a “surveillance sharing” partner. 

In addition, the application also appears to include a Nasdaq-Coinbase agreement to supplement the exchange’s surveillance program, after the SEC raised concerns about the clarity of the filing.

BlackRock’s new Bitcoin ETF takes advantage of Coinbase collaboration

As anticipated, the latest filing regarding leading asset manager BlackRock’s attempt to launch a spot Bitcoin exchange-traded fund (ETF) included an agreement to share oversight with Coinbase, a well-known cryptocurrency exchange.

Subsequently, the SEC released the filing, which was amended by ARK Investment Management to include a surveillance sharing agreement with the Chicago Board Options Exchange (Cboe) and an anonymous US-based cryptocurrency exchange. 

Initially, it was assumed that the agreement was with Coinbase, which would create a conflict with BlackRock’s ETF application.

However, on 30 June, the SEC stated that the crypto ETF filings with Nasdaq and Cboe were not clear and complete enough and requested additional information on the surveillance agreements. 

It is worth recalling that BlackRock had first filed for the spot BTC ETF on 15 June. In any case, at the moment, the SEC has not yet approved any spot ETFs related to cryptocurrency investments, despite numerous requests from the market. 

Not surprisingly, Grayscale Investments even filed a lawsuit against the SEC after its spot Bitcoin ETF was rejected in June 2022, claiming that the regulator had not applied consistent treatment to similar investment vehicles.

Coinbase registers +12% after disclosure of partnership with BlackRock

Based on the latest news, we see that Coinbase recorded a 12% increase in its share price following the revelation of its partnerships with Bitcoin spot ETFs. 

According to The Block, the price increase was caused by the exchange’s partnership with Fidelity and other major players to introduce new spot Bitcoin exchange-traded funds.

As we know, the announcement of BlackRock’s filing for a spot Bitcoin ETF started immense competition in the industry. Not surprisingly, soon to follow was Fidelity, another wealth management giant, which quickly joined in as well. 

With numerous other participants, the industry witnessed a wave of players from traditional finance trying to enter the market, which had a positive impact on Coinbase. 

Specifically, recent gains of 12% correspond to an overall increase of 138% since the beginning of 2023. In addition, an outperformance of the overall cryptocurrency market was observed. 

Moreover, when Fidelity unveiled its filing for the Bitcoin spot ETF on 30 June, it mentioned the important contribution of Coinbase. Specifically, the exchange would help “monitor manipulation in the spot market,” according to a report by The Block. 

This move followed concerns expressed by the SEC about the original filing and market surveillance issues in the initial agreement.

It is worth recalling that prior to this, Coinbase, one of the most prominent cryptocurrency exchanges, experienced a rather up-and-down month, with shares heavily influenced by the actions of the US Securities and Exchange Commission (SEC). 

This has affected the perception of the exchange in the entire industry, leading to a decrease in its overall performance.

What are the chances of BlackRock’s Bitcoin ETF being approved by the SEC?

According to Bloomberg Senior Analyst Eric Balchunas, BlackRock’s Bitcoin ETF has a 50-50 chance of being approved by the US Securities and Exchange Commission (SEC).

Specifically, Balchunas said the new ETF has a fair chance of gaining the coveted approval. 

Moreover, he suggested that this move could be an attempt by the regulator to “save face” by accepting the presence of traditional finance in the cryptocurrency space: 

Interestingly, giving the ETF a 50% chance of approval is a significant announcement. This is because of the SEC’s reluctance to welcome Bitcoin ETFs to the market, citing past concerns regarding market manipulation.

On the other hand, Balchunas closely links the outcome of BlackRock’s application to the development of the Grayscale case. In fact, he cited another Bloomberg analyst, Elliott Stein, who gave Grayscale a 70% chance of winning the case against the SEC. 

Therefore, the development of this case could influence the decision regarding BlackRock. Balchunas’ words of choice are also interesting, as they highlight BlackRock’s acceptance perspective. 

He suggests that the SEC could “save face” by using reliable traditional finance, known as “TradFi for adults,” over traditional decentralized finance. 

However, this still highlights the underlying conflict between the regulator and the digital asset industry. In other words, there still does not seem to be a compromise on how these two sides can coexist to improve the industry.