The Securities and Exchange Commission (SEC) has stated that recent applications submitted by asset managers to launch spot bitcoin exchange-traded funds (ETFs) are not satisfactory.
According to a report by The Wall Street Journal, The SEC has informed Nasdaq and Cboe Global Markets, who filed the applications on behalf of asset managers such as BlackRock and Fidelity Investments, that the applications lack clarity and comprehensiveness. The exchanges and asset managers have the option to revise the applications based on the regulator’s feedback and resubmit them.
Since BlackRock in mid-June announced its plans for an ETF that actually holds bitcoin, the prices of bitcoin and bitcoin-related stocks have surged. Bitcoin has experienced a 20% increase and surpassed $30,000, marking an all-time high for 2023. Coinbase Global, which is listed as the custodian for the BlackRock fund’s holdings, saw its shares rise over 30% during the same period.
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Following BlackRock’s lead, several traditional and bitcoin asset managers, including Fidelity Investments, Ark Investment Management led by Cathie Wood, Invesco, WisdomTree, Bitwise Asset Management, and Valkyrie, have either reactivated or amended their applications for a spot bitcoin ETF in recent days.
An ETF that tracks the actual price of bitcoin would be a significant development for the industry, as it would grant investors easier access to bitcoin. It would allow them to buy and sell bitcoin through a brokerage account, similar to trading stocks.
In the past, the SEC has rejected such funds, citing concerns about fraud and market manipulation. However, several ETFs based on bitcoin futures are already available.
The bid by BlackRock, the world’s largest money manager, was seen by investors and analysts as the most promising opportunity for a spot bitcoin ETF, given the company’s successful track record in getting applications approved.
Industry experts anticipated that BlackRock’s filing for a spot bitcoin ETF would address the SEC’s concerns by proposing a “surveillance-sharing agreement” with Nasdaq, the ETF’s listing exchange. Fidelity and Ark also mentioned similar agreements with Cboe for their respective ETFs.
However, the SEC informed the exchanges that the filings were returned because they did not specify the spot bitcoin exchange involved in the surveillance-sharing agreement, or provide sufficient details about these arrangements.
Cboe intends to update its applications and submit them again, according to a spokeswoman’s statement to The Wall Street Journal. The SEC, Nasdaq, BlackRock, Fidelity, Invesco, WisdomTree, and Ark reportedly declined to comment on the matter.
By refiling the applications, asset managers would need to start the process anew, causing a delay of at least seven days in the race to be the first to launch a spot bitcoin ETF.
Once an application is resubmitted, the SEC has 15 days to open it for public commentary. During this time, the SEC can return the filing to the applicant by the seventh day. After the 15-day period concludes, the SEC has a maximum of 240 days to approve or reject the filing.