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Cathie Wood’s ARK Invest has revised its Bitcoin Spot ETF application to incorporate a new surveillance sharing agreement, drawing inspiration from the filing made by investment firm BlackRock earlier this month.
This adjustment may enhance ARK’s prospects of obtaining approval from the U.S. Securities and Exchange Commission (SEC), which has rejected all variations of the product to date.
ARK’s Significant Adjustment
As per ARK’s updated 19b-4 filing, the proposal indicates that the Cboe BZX Exchange – where ARK’s 21 Shares ETF would be listed – will establish a surveillance sharing agreement (SSA) with “an operator of a United States-based spot trading platform for Bitcoin.”
ARK did not specify which particular spot exchange it would collaborate with, but asserted that it accounted for a “substantial portion of US-based Bitcoin trading.”
“This Spot BTC SSA, in conjunction with the information accessible through [Intermarket Surveillance Group] related to CME Bitcoin Futures, which the Exchange believes represents a regulated market of considerable size, would further enhance the Exchange’s capacity to identify and prevent manipulation of the Shares,” stated ARK.
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The failure to establish an adequate surveillance-sharing agreement concerning Bitcoin spot trading was the reason behind the rejection of ARK’s previous ETF application in January.
While ARK and other companies – including Grayscale – have suggested entering this agreement with CME Bitcoin Futures, the SEC contends that this market is not sufficiently linked to spot Bitcoin trading.
ARK maintained its rationale for utilizing CME Bitcoin Futures, asserting that other ETFs have received approval for commodities that leverage their corresponding CME futures market as a “regulated market of significant size.” Additionally, many of these commodity and currency-based ETFs had unregulated spot markets, including those for gold, silver, platinum, palladium, and copper.
BlackRock’s Submission
BlackRock’s own 19-b4 filing contained the same statement as ARK regarding its respective stock exchange, Nasdaq, entering an SSA with a spot Bitcoin exchange in the United States.
According to Bloomberg ETF analyst Eric Balchunas, ARK’s filing positions the firm to potentially receive approval ahead of BlackRock, as it submitted its application first.
Balchunas also noted that BlackRock may have hindered Coinbase from participating in ARK’s SSA, given that the investment giant is already in partnership with Coinbase for its own product.
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