BlackRock, the world’s largest asset manager, reportedly worth $9 trillion, has included Coinbase, a leading cryptocurrency exchange platform, as a Surveillance-Sharing Agreement (SSA) counterpart in its recent Spot Bitcoin ETF refiling. This move comes as the Securities and Exchange Commission (SEC), led by Gary Gensler, has been increasingly critical of Coinbase’s operations. Despite the SEC’s concerns, BlackRock and other financial behemoths have expressed their intent to conduct business with Coinbase, revealing the complex and contradictory nature of the evolving cryptocurrency landscape.
In the last few weeks, the attention on Spot Bitcoin ETFs has surged, with BlackRock leading the charge after filing for the fund. Following suit, other traditional finance entities, including Fidelity, have made similar filings. BlackRock’s updated submission for its iShares Bitcoin Trust, detailed in a 19b-4 form, includes a Coinbase SSA designed to counter concerns about potential market manipulation, a key issue for the SEC.
The Spot BTC SSA, intended to be a bilateral surveillance-sharing agreement between Nasdaq and Coinbase, is expected to strengthen the exchanges’ market surveillance program. Fidelity, along with other companies looking to launch a Spot Bitcoin ETF, will need to incorporate similar agreements to comply with regulatory standards. However, the SEC’s approval for such a fund is still pending, with the agency deeming previous submissions “inadequate”. Consequently, traditional finance firms are navigating a challenging regulatory landscape.
BlackRock’s Bitcoin ETF initiative was initially filed by Nasdaq, and approval of the filing has been a critical issue. With this step, the giant asset management firm is proposing to list and trade the Shares under Nasdaq Rule 5711(d), which manages the listing and trading of Commodity-Based Trust Shares. The iShares Delaware Trust Sponsor LLC, an indirect subsidiary of BlackRock, is sponsoring the Trust, and the Shares will be registered with the SEC by means of the Trust’s registration statement on Form S-1.
The Trust will primarily consist of bitcoin, held by a custodian on behalf of the Trust. Coinbase Custody Trust Company, LLC will be the custodian for the Trust’s bitcoin holdings. Simultaneously, the Bank of New York Mellon will be the custodian for the Trust’s cash holdings.
The ultimate goal of the Trust is to reflect the performance of the price of bitcoin before the deduction of the Trust’s expenses and liabilities. The shares offer an alternative investment method that resembles a direct investment in bitcoin without the complexities and operational burdens of direct bitcoin ownership.
In conclusion, while the SEC’s stance on Coinbase and other cryptocurrency exchanges continues to draw attention and controversy, the eagerness of major financial institutions to engage with these platforms underscores their pivotal role in the evolving digital asset space. As the industry navigates these complexities, the push toward mainstreaming cryptocurrencies appears undeterred.
