An investment manager with $1 billion in assets under management (AUM) is naming Coinbase as its surveillance-sharing partner in an application to list a spot Bitcoin (BTC) exchange-traded fund (ETF) on the Nasdaq stock exchange.
Valkyrie updated its filing after the U.S. Securities and Exchange Commission (SEC) rejected its previous attempts for failing to meet regulatory requirements for preventing fraudulent acts and protecting investors.
Surveillance-sharing agreements are considered a standard market practice for reducing fraud and market manipulation. It is also among the primary reasons that the SEC cites for rejecting spot Bitcoin ETF applications.
In new documents submitted on Wednesday, Valkyrie says that Nasdaq already executed a term agreement to enter into a surveillance-sharing agreement with Coinbase, which accounts for over 50% of the market share of BTC-USD spot trading volume.
“On June 30, 2023, the Exchange executed a term sheet with Coinbase to enter into a Spot BTC SSA. Based on this agreement, the Exchange and Coinbase will finalize and execute a definitive agreement that the parties expect to be executed prior to allowing trading of the Commodity-Based Trust Shares. Trading of Bitcoin on Coinbase represents a significant portion of US-based Bitcoin trading.”
The move could be key to the regulator’s approval for Valkyrie’s spot Bitcoin ETF. The SEC also recently told the Nasdaq and the Chicago Board Options Exchange (CBOE) that the spot Bitcoin ETF applications of investment firms BlackRock and Fidelity are unclear and incomprehensive.
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