In a flurry of Friday afternoon activity, Fidelity Investments led a handful of firms that filed a fresh set of applications for a spot bitcoin exchange-traded fund to add new details after the Securities and Exchange Commission indicated that the initial filings were insufficient.
The companies — which also include Invesco, VanEck, 21Shares and WisdomTree — are among eight that are seeking to launch what would be an initial crop of U.S. spot bitcoin ETFs. BlackRock Inc. set off the wave with its surprise filing for such a fund in mid-June.
All of the five that refiled Friday indicated that Coinbase Global Inc. will provide market surveillance in support of their funds, a fact that wasn’t included in previous iterations.
Crypto market surveillance may be key to gaining SEC approval for a spot bitcoin ETF. The surveillance can dramatically reduce fraud and market manipulation, which were top reasons the agency rejected around 30 spot bitcoin ETF applications to date.
Coinbase is also in line to provide various services for the other proposed fund issuers, according to a person familiar with the matter who wasn’t authorized to speak about the deals publicly. Besides BlackRock, these companies include Valkyrie and Bitwise. In a recent filing, 21Shares said Coinbase would provide custody services as well. The other issuers declined to confirm whether Coinbase would be involved.
Fans of digital assets are excited about the prospect of crypto potentially becoming more easily accessible to everyday investors, and the wave of filings has been a boon for token prices. Bitcoin jumped back above $30,000 in June and is trading at its highest levels in about a year. The token on Friday traded at around $30,400. That’s still less than half the record of almost $69,000 reached in November 2021.
To be sure, rule filings aren’t effective until approved by the SEC.
Coinbase’s involvement with the proposed ETFs could mean a revenue influx at a time when the crypto-exchange industry is suffering from low volumes. Coinbase’s revenue last year was less than half of 2021, when the industry was in a bull market. The news also comes during its battle with the SEC, which accused Coinbase of running an illegal exchange.
Following BlackRock’s filing for the ETF in mid-June, seven other firms filed or refiled for spot ETFs amid market optimism that the SEC would reverse its long-standing view that the funds shouldn’t be allowed. In evidence of a partial thaw, the agency did allow ETFs tied to bitcoin futures in 2021.
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"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
Chair also praised the passage of stablecoin legislation this week.
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