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., 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. The price of bitcoin increased as well by around 20% from $25k to $30k in the one week following BlackRock’s filing.
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. 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. 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.