ARK Invest, led by Cathie Wood, and digital asset manager 21Shares, recently revised their application for a US-based Bitcoin ETF to include a surveillance-sharing agreement in a move that appears to be in reaction to BlackRock‘s filing two weeks earlier.
These surveillance-sharing agreements, planned between the CBOE options exchange and a US-based Bitcoin trading platform, aim to augment market transparency and unify crypto markets with existing US market surveillance practices.
ARK and 21Shares’ amendment comes on the heels of an analysis by ARK’s Yassine Elmandjra, who stated that incorporating surveillance-sharing agreements into existing applications should be relatively straightforward and inexpensive. This change potentially positions ARK and 21Shares ahead of BlackRock in the race to debut the first US-based Bitcoin ETF, given that they submitted their filing in April.
The SEC’s primary concerns with Bitcoin ETFs have centered around potential market manipulation, leading to multiple rejections of applications for physically-backed Bitcoin ETFs. The regulator has frequently expressed a need for surveillance-sharing agreements with a “regulated market of significant size,” according to Bloomberg Intelligence.
BlackRock’s application sparked a significant rally in the cryptocurrency market, with Bitcoin’s value soaring more than 21% and exceeding $30,000. This rise reflects the financial heavyweight’s influence and prestige in the investment community.
Moreover, a survey by Nomura-backed Laser Digital showed that 96% of 303 professional investors surveyed, collectively managing $4.95 trillion, expressed an interest in investing in crypto. The survey also revealed positive sentiment towards Bitcoin and Ethereum among 82% of the participants, while 88% reported either considering investing in cryptocurrencies or their clients doing so.
BlackRock’s Bitcoin ETF filing has reignited institutional interest, leading to an optimistic forecast of a new wave of Bitcoin-related financial products from Wall Street. Bitcoin has also been bolstered in the wake of the SEC’s enforcement actions against crypto exchanges Binance and Coinbase, in which the regulator directly asserts that several notable tokens and projects—including Solana, Cardano, Polygon, and more—are unregistered securities in its view.
Bitcoin, notably, is not named in either suit, and SEC chair Gary Gensler has explicitly stated his view that Bitcoin is the sole cryptocurrency that does not fit the definition of security.
Critics, however, warn that the proposed structure of BlackRock’s ETF is similar to past failed applications, leading to skepticism over its chances of approval. Yet, as the world’s largest asset manager, BlackRock’s move reflects increasing demand for Bitcoin exposure among its clientele, which includes some of the world’s biggest institutions.