Fidelity Leads the Charge: Second Wave of Bitcoin ETF Applications

• After the SEC dismissed a number of Bitcoin ETF applications citing insufficient details, entities like Fidelity are reapplying, while BlackRock is yet to join the second round.
• Most applications were deemed deficient in providing enough information on surveillance sharing agreements, and they now rely on the crypto exchange, Coinbase, to fortify this aspect.

US regulatory body, the Securities and Exchange Commission (SEC), and its head, Gary Gensler, have a full slate with the recent Bitcoin-Spot-ETF applications. Late last week, it rejected proposals from institutional heavyweights like BlackRock and Fidelity, deeming them “insufficient” and demanding resubmission, as reported by the Wall Street Journal.

Revitalizing ETF Applications: Embracing Surveillance Sharing Agreements

The previously submitted Bitcoin ETF applications lacked comprehensive information regarding surveillance sharing agreements, leading to the SEC’s dismissal. However, many of these applicants have promptly revised their submissions. The Chicago Board Options Exchange (Cboe) resubmitted the applications on behalf of Fidelity, WisdomTree, VanEck, Ark Invest, and others. BlackRock, the world’s largest asset manager, however, has not yet reentered the fray.

Insufficient details on surveillance sharing agreements, also known as SSAs, with crypto exchanges were among the key gaps in the previous submissions. These agreements are vital to safeguard Bitcoin Spot ETFs. All the companies in this second wave of applications are counting on the cryptocurrency exchange, Coinbase, to facilitate these agreements.

According to the revised Bitcoin ETF application by Ark Invest, this additional agreement with Coinbase would allow

“additional access to data about Bitcoin spot trades on Coinbase, if the exchange determines that this is necessary within the framework of the surveillance program.”

Despite an ongoing legal tussle with the SEC, Coinbase seems to hold a key position in this second wave of Bitcoin ETF applications. It appears that the firms, including Fidelity, are undeterred by Coinbase’s legal issues. Even BlackRock is reportedly planning to rely on Coinbase for its eventual resubmission. This bold move underlines the relentless pursuit of the financial giants to venture into the realm of Bitcoin ETFs, demonstrating their robust faith in the future of cryptocurrency markets.