The addition of surveillance-sharing agreements by BlackRock to its Bitcoin ETF application has raised questions about the company’s ability to “crack the code” and get approval. There are causes to doubt this premise, nevertheless.
First, plans for Bitcoin ETFs do not include any novel surveillance-sharing arrangements. In actuality, these are frequently accepted practises. It is logical to assume that other companies, including Fidelity, Bitwise, and Van Eck, would have already had success with their own apps if their inclusion was all that was necessary for approval.
This suggests three possible explanations: either BlackRock is trying something new, it is testing the waters, or it is hoping this time the Securities and Exchange Commission (SEC) commissioners will take a different tack. If the latter is the case, the preceding SEC dissent may have hints.
In particular, SEC Commissioner Hester Peirce has frequently objected to the rejection of ETFs. Peirce stated in her 2018 dissent about the Winklevoss denial that the SEC was improperly concentrating on the operation of the spot market and that the plan was sufficient in avoiding manipulation of ETP-share prices. Similar arguments were made in her 2020 dissent on the application from Wilshire Phoenix and NYSE Arca Inc.
In their opposition on the VanEck proposal in 2023, Peirce and Commissioner Mark Uyeda (a Biden nominee) argued that the commission was employing a “different set of goalposts” for commodity-based ETPs and questioned the SEC’s position on surveillance-sharing agreements.
In conclusion, the overall picture is changing, even though a surveillance-sharing agreement included in BlackRock’s application might not be the “silver bullet” it is thought to be. The second half of 2023 may in fact witness the approval of a number of spot Bitcoin ETFs due to increased analytical and data-driven arguments and probable shifts in the perspectives of SEC commissioners.
