Financial industry giants and asset managers including Fidelity Investments, BlackRock, ARK Investment Management, WisdomTree, and Valkyrie have filed documents with the Securities and Exchange Commission (SEC) in an effort to be the first issuer to provide a spot bitcoin ETF.
Many people view a clause known as a surveillance-sharing agreement (SSA) as being a crucial part of the application procedure.
What are agreements for exchanging surveillance data?
In the context of spot bitcoin trading, agreements for the sharing of market surveillance are referred to as surveillance-sharing agreements.
By exchanging trade data and information, these agreements seek to improve the integrity and transparency of the bitcoin market.
Spot bitcoin trading, as opposed to the trading of bitcoin derivatives or futures contracts, refers to the purchasing and selling of real bitcoin for immediate delivery.
Surveillance-sharing agreements can aid in resolving issues with market manipulation, insider trading, and other illegal behaviors as the bitcoin market operates outside of conventional regulatory systems.
In accordance with these agreements, cryptocurrency exchanges may supply regulatory agencies or surveillance companies with transaction data, order book information, and other pertinent market data.
As a result, the surveillance service providers or regulators can keep an eye on trade activity, spot abnormalities, and guarantee that all rules and regulations are being followed.
A brief history of the SSA and SEC
Bitcoin futures contracts, or agreements to purchase or sell the commodity at a future date for a predetermined price, are presently available to US investors through cryptocurrency exchange-traded funds (ETFs).
However, a bitcoin spot ETF, which would invest directly in the digital currency and possibly change the game in the crypto world, would provide investors direct exposure to the price of bitcoin. These ETFs provide indirect exposure to the price of bitcoin.
Regulators have expressed dissatisfaction with the most recent round of spot bitcoin ETF submissions, which appears to have dashed expectations for an expedited decision on a historic spot bitcoin ETF. It seems that a surveillance-sharing arrangement that has been approved is the key to acceptance.
The SEC was always going to need more information and most likely will want to examine the specifics of said SSA before remotely contemplating approval on this basis, according to James Seyffart, an ETF analyst for Bloomberg Intelligence.
Firms are allowed to make changes and submit their files again. The Wise Origin Bitcoin Trust was re-filed by Fidelity, and Cboe announced it will amend and re-file its documentation. A representative declined to give more information. BlackRock’s iShares division declined to comment and, as of July 3, it didn’t appear to have changed its application.
More detail
With the help of these agreements, players in the spot bitcoin market will be able to trade in an environment that is fair, open, and safe.
Market players and regulators are supposed to be able to learn more about the general dynamics of the market, spot possible market abuses, and respond appropriately to preserve market integrity through exchanging information.
It is important to keep in mind that different exchanges and regulatory authorities may have different requirements for the terms and circumstances of surveillance-sharing agreements. Depending on the particular agreement and the legal environment in which the exchange works, the amount of data provided, the frequency of reporting, and the companies participating may vary.
While a spot bitcoin ETF would provide investors immediate access to the digital asset, easier access does not imply they should buy in them as soon as they are authorized. Investors should conduct their own due diligence before making an investment, just like they would with any other asset.
There is no question that these special funds will be a key force in the ETF market given the competition among some of the biggest businesses in the ETF sector, like BlackRock and Fidelity, to launch the first bitcoin ETF.
Is it possible to restore trust in the SEC with a more thorough surveillance-sharing agreement?
