Cboe BZX Exchange Adds Surveillance Sharing Agreement to ARK 21Shares Bitcoin ETF Filing, Potentially Competing with BlackRock

Key points:

  • CBOE BZX Exchange has amended its 19b-4 filing for the proposed ARK 21Shares Bitcoin ETF to include a surveillance sharing agreement (SSA).
  • The SSA is similar to the one used by BlackRock for its spot bitcoin fund and aims to deter fraud and market manipulation within the ETF.
  • The exchange expects to enter into a bilateral surveillance-sharing agreement with a U.S.-based spot trading platform for bitcoin, supplementing its market surveillance program.
  • This amendment potentially puts ARK in competition with BlackRock to gain the first approval of a spot bitcoin ETF, as the original filing for ARK’s fund predates BlackRock’s. The inclusion of SSAs in recent filings reflects growing efforts to address fraud and manipulation concerns surrounding spot bitcoin ETFs.

The CBOE BZX Exchange has made an amendment to its 19b-4 filing for the proposed ARK 21Shares Bitcoin ETF, introducing a surveillance sharing agreement (SSA) similar to one employed by BlackRock for its spot Bitcoin fund. The inclusion of this feature aims to deter fraud and market manipulation within the cryptocurrency market.

The original 19b-4 filing made in April did not mention the surveillance sharing agreement. BlackRock’s spot bitcoin ETF, which differed from previous attempts to gain approval from the U.S. Securities and Exchange Commission (SEC), featured the SSA with the bitcoin spot market. This amendment potentially puts ARK in competition with BlackRock to be the first to secure approval for a spot bitcoin ETF, given that the original filing for ARK’s fund predates BlackRock’s.

In the updated filing, the CBOE BZX Exchange stated its intention to implement additional measures to enhance its ability to detect, investigate, and prevent fraud and market manipulation in the Commodity-Based Trust Shares. As part of this effort, the exchange plans to enter into a surveillance-sharing agreement with a US-based spot trading platform for Bitcoin.

This bilateral agreement, known as the Spot BTC SSA, is expected to provide the CBOE BZX Exchange with supplementary access to data concerning spot Bitcoin trades on the US BTC Spot Market Platform. By incorporating this information into its surveillance program, the exchange aims to bolster its market monitoring capabilities.

Notably, the US Securities and Exchange Commission (SEC) has never approved such an ETF before, expressing concerns about fraud and manipulation in the past.

Recently, CBOE also filed for spot funds from WisdomTree Bitcoin Trust, VanEck Bitcoin Trust, and Invesco Galaxy Bitcoin ETF, all of which incorporate the surveillance sharing agreement feature. The increasing adoption of this agreement underscores the industry’s commitment to addressing regulatory concerns and strengthening market integrity in the cryptocurrency space.

As the race for the first spot Bitcoin ETF approval intensifies, market participants eagerly await the SEC’s decision, which will shape the future of digital asset investment opportunities and regulatory oversight in the United States.

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