For its spot trading ETF, Cboe names Coinbase as a partner for surveillance-sharing agreements

The Chicago Board Options Exchange’s (Cboe) BZX Exchange announced leading crypto exchange Coinbase as its surveillance partner for its Bitcoin spot trading Exchange Traded Fund (ETF) while refilling applications with the US Securities and Exchange Commission (SEC).

On June 30, 2023, the SEC had informed Cboe and Nasdaq that their applications for their spot trading ETFs were “inadequate” as they didn’t state the market that the exchanges were working with as fund sponsors on their surveillance sharing agreements (SSA).

Cboe’s announcement comes at the heels of several asset management companies filing applications for their spot trading ETFs over the last few weeks. These companies include BlackRock, ARK Invest, Galaxy/Invesco, WisdomTree, VanEck, and Fidelity. All eyes are now on the SEC which has rejected several spot trading ETF applications over the past few years. 

While refiling applications. Cboe stated that Coinbase represented a substantial portion of US-based and USD-domination trading of Bitcoin. The filing said that the Spot BTC SSA is expected to be a surveillance-sharing agreement between Cboe and Coinbase. With the SSA, Cboe would be able to access data “data regarding spot Bitcoin trades on Coinbase”.

SEC’s 45-day review yet to start

While reviewing applications for spot trading ETFs, SEC has been seeking SSAs for markets of “significant size”. The commission has claimed that the sought information is necessary to curb market manipulation or other unwanted behaviors to protect cryptocurrency users’ interests. The lack of SSAs was the key reason behind SEC rejecting several applications for Bitcoin spot trading ETFs.

The regulatory body is yet to formally acknowledge Cboe’s refiled applications. The publication of the filings in the national logbook, the Federal Register, would mark the beginning of the SEC’s 45-day review period. However, the commission can extend the review period to 240 days, if required.

Coinbase’s recent brush with SEC might complicate things

What might complicate matters is SEC’s recent action against Coinbase earlier this month where the market regulator accused it of running an unregistered crypto exchange. On June 6, the SEC sued Coinbase and alleged that the exchange had earned billions of dollars by acting as a “middleman” and by trading at least 13 cryptocurrency tokens that should have been registered as securities. The 13 tokens mentioned by SEC included new crypto coins and popular altcoins like Polygon, Cardano, and Solana. 

Earlier this year, the leading coin tracker was also sued for its staking programme. The SEC had accused Coinbase of offering rewards to its customers who staked tokens to support operations of a blockchain network while charging a commission for itself. 

Incidentally, the lawsuit came just a day after the SEC sued another crypto exchange Binance for allegedly mishandling users’ funds, lying about its operations, and reporting inflated trading volumes.

Coinbase is one of the leading cryptocurrency exchanges that was founded in 2012 by Brian Armstrong and Fred Ehrsam. With users spread across more than 100 countries, Coinbase is an accessible platform for all kinds of information about crypto assets. Be it finding out what is the best time of day to buy cryptocurrency or looking for tokens to meet a target like how to make $100 a day with cryptocurrency, there is a lot to explore on Coinbase.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Leave a Reply