CRA Insights

Surveillance-sharing agreements and spot crypto ETFs


BlackRock’s recent application to launch a spot bitcoin Exchange Traded Fund (ETF), the iShares Bitcoin Trust, along with Nasdaq filing a proposal to list the ETF, has been touted as a game changer for ushering in spot-based crypto ETFs in the United States.[1],[2] BlackRock has a strong track record of 575 ETF approvals and only one rejection. Its application triggered a chain of subsequent re-submissions by other ETF applicants, such as WisdomTree and Ark Invest, whose past spot bitcoin ETF filings were rejected by the SEC.[3] The price of bitcoin increased as well by around 20% from $25k to $30k in the one week following BlackRock’s filing.[4]

The SEC in its past denial of spot bitcoin ETFs has stated the importance of surveillance-sharing agreements and how it relies on them to detect and deter fraud.[5] In a recent CRA Insights, we reviewed futures-based crypto ETFs and discussed how a potential for fraud and manipulative practices has been a deciding factor in the SEC’s denial of ETFs which physically hold cryptocurrencies to operate in the United States.[6] In this CRA Insights, we present a brief overview of surveillance-sharing agreements and provide examples of surveillance tools employed by regulatory authorities to detect market manipulation.

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