Cboe resubmits spot Bitcoin ETF filing, names Coinbase as oversight sharing agreement partner

Yesterday, it was reported that the SEC claimed the data in the spot Bitcoin ETF fund files submitted by BlackRock, Fidelity, and companies to Nasdaq and Cboe Chicago Options Exchange was not clear and comprehensive. Cboe promptly amended and submitted the updated 19b-4 file for the spot Bitcoin ETF, naming Coinbase as the overseeing sharing agreement partner.

Last night's bombshell: Wall Street Journal: SEC claims BlackRock and others' spot Bitcoin ETF data is insufficient; BTC briefly fell below 30K.

Cboe Clearly States Signing Supervisory Sharing Agreement with Coinbase

Recent applications for Bitcoin spot ETFs include: Ark and 21Shares Bitcoin ETF, ProShares Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree Bitcoin Trust, and Fidelity's Wise Origin Bitcoin Trust, all of which are in collaboration with the Chicago Board Options Exchange (Cboe) and are expected to be traded on its platform.

Cboe promptly updated and submitted a 19b-4 document last night, explicitly stating that they will sign a supervisory sharing agreement with Coinbase. It emphasizes that this agreement will combine with information related to CME's Bitcoin futures to further enhance the exchange's ability to detect and prevent market manipulation.

In the document submitted for Fidelity, many data points were cited to demonstrate that the Bitcoin spot market has already proven itself capable of "preventing fraud and manipulative acts and practices." However, Cboe Exchange proposed additional measures beyond the above measures to supplement its information-gathering capabilities, which would help in identifying, investigating, and preventing fraud and market manipulation in commodity trusts.

The exchange is expected to sign a supervisory sharing agreement with Coinbase, as Coinbase represents a large portion of U.S.-based Bitcoin trades priced in USD. This agreement will enable the exchange to supplement its data on spot Bitcoin transactions occurring on Coinbase.

If such an agreement is reached between the exchange and Coinbase, the exchange will incorporate the spot Bitcoin supervisory sharing agreement into its market surveillance plan before allowing ETF trading. This monitoring sharing agreement, combined with information related to CME's Bitcoin futures, which the exchange believes represents a significantly regulated market, will further enhance the exchange's ability to detect and prevent market manipulation.

Is Coinbase, entangled in lawsuits with the SEC, really up for it?

Asset management giant BlackRock submitted a Bitcoin spot ETF in mid-June, sparking intense market discussions, with other peers following suit, leading to the current Bitcoin rally. BlackRock initially chose Coinbase as the custodian for Bitcoin, which raised many questions, as SEC Chairman Gary Gensler publicly stated in March this year that investment advisors should not rely on cryptocurrency exchanges as qualified custodians.

While the initially well-received supervisory sharing agreement did not specify the collaborating party in BlackRock's application documents, the general speculation is that it is with the largest compliant exchange in the U.S., Coinbase. Now that Cboe has clearly identified the partner, will Coinbase, currently embroiled in lawsuits with the SEC, really have the opportunity to gain the trust of the regulatory agency and embark on another compliant chapter in the U.S.?