An investment manager with $1 billion in assets under management (AUM) names Coinbase as its supervisory sharing partner in an application to list a spot Bitcoin (BTC) exchange-traded fund (ETF) on the Nasdaq exchange.
Valkyrie updated the filing after the U.S. Securities and Exchange Commission (SEC) rejected its previous attempts for failing to meet regulatory requirements for fraud prevention and investor protection.
Surveillance sharing agreements are considered standard market practice to reduce fraud and market manipulation. It is also one of the main reasons the SEC cites for rejecting spot Bitcoin ETF applications.
New documents Filed on Wednesday, Valkyrie says Nasdaq has already entered into a term agreement to enter into a supervisory sharing deal with Coinbase, which accounts for more than 50% of the BTC-USD spot trading volume market share.
“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 final agreement that the parties expect to be executed before trading of the Commodity-Based Trust Shares is permitted. Bitcoin trading on Coinbase represents a significant portion of US-based Bitcoin trading.”
The move could be key to regulatory approval for Valkyrie’s spot Bitcoin ETF. The SEC also recently told the Nasdaq and the Chicago Board Options Exchange (CBOE) that mock Bitcoin ETF filings from investment firms BlackRock and Fidelity are unclear and incomprehensible.
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