A Second Wave of Bitcoin ETF Applications as Valkyrie Refiles: Is SEC Running out of Excuses?
Will the second round of applications do better? | Credit: Shutterstock
Key Takeaways
- A new rule: If BlackRock files for a spot ETF, Valkyrie follows suit
- Coinbase might be the magic bullet against SEC disapproval
- BlackRock CEO demands clarity on SEC’s “inadequate” statement
Despite applications filed by countless companies, The SEC has yet to approve a single spot ETF application. BlackRock, the world’s biggest asset manager and seemingly de-facto leader of the ETF movement, has re-filed its ETF application. And, it seems every time BlackRock makes any changes to its ETF application, Valkyrie copies its exact steps.
Valkyrie has re-filed its ETF application through NASDAQ, on which it would list its ETF should it be accepted by the SEC. The company listed Coinbase as its surveillance partner on the ETF application, adding a surveillance-sharing agreement and seeking acceptance from the regulating body.
The interesting aspect is that Coinbase, the exchange both asset firms are using to enter a surveillance-sharing agreement, is currently facing a lawsuit filed by the SEC, citing that it traded in “unregistered securities”.
The applications and the SEC’s responses create curiosity about the possibility of the SEC eventually accepting these spot ETF applications. Also, why are these companies staking their futures on an exchange that is currently at odds with the SEC?
Why The SEC Shoots Down ETF Applications?
Last week, the SEC released a statement regarding spot ETF applications filed by companies such as BlackRock, Valkyrie, and Fidelity. The regulating body described these applications as “inadequate”.
The SEC’s statement reported that while these companies have agreed to enter a surveillance-sharing agreement, they all failed to name a crypto exchange that will be responsible for carrying it out.
This is reminiscent of the only BlackRock ETF application ever to get entirely rejected by the SEC.
Back in 2014, BlackRock filed an application for an ETF with the SEC, alongside Precidian Investments. At the time, the SEC responded to the application by stating that it “preliminarily intends to deny the application.”
The main reason cited behind the rejection was that both applications gave the impression that neither company intended to provide transparency toward their earnings through said ETFs. The claim revolved around the fear that such ETFs would allow their corresponding companies to manipulate the market to their own advantage, which the SEC saw as a major risk.
The SEC is basically holding the same stance with applications filed by BlackRock, Valkyrie, Fidelity, and others. The SEC is adamant about receiving an optimum solution to remove any doubts about market manipulation and market insecurity.
Coinbase, The Key To Surveillance
It’s quite ironic that Coinbase, the exchange that has been fighting off the SEC for months on a lawsuit where the SEC is claiming the company traded in unregistered securities, is now the one factor that may lead to the SEC approving BlackRock and Valkyrie’s applications.
Interestingly enough, this is the Coinbase that requested the federal government to force the SEC to clear a clear and transparent framework for digital asset trading. To no one’s surprise, the SEC blatantly refused Coinbase’s request.
The regulating body’s response claimed that “Coinbase has no right to mandamus, which orders a government agency to fulfill certain duties.” It also added that “Coinbase instead asserts that this Court should compel the Commission to act on Coinbase’s recently filed rulemaking petition. But no statute or regulation requires the Commission to take such action on a specific timeline.”
The same sentiment is carried over by BlackRock, the same company now refiling its ETF application.
BlackRock CEO Demands Clairty
Larry Fink, CEO and Chairman of BlackRock went on an interview to discuss the latest news regarding his company’s ETF application.
Fink expressed his stance regarding digital assets, especially Bitcoin. The CEO says he sees cryptocurrencies as a way to “digitize gold”, referring to the decentralized nature of the currency, shielding it from changes in fiat currency values.
He also added that his company’s spot ETF might help “democratize crypto” by making it more accessible to investors by reducing the costs of trade.
Most importantly, Fink sent a clear message to the SEC, asking for clarity on what it would take to get his spot ETF application accepted by the regulatory body.
“We hope our regulators look at these filings as a way to democratize crypto.”
