Bitcoin ETF Relies on “Comprehensive Surveillance Agreement”

Reading Time: 2 minutes
  • The awarding of a spot Bitcoin ETF relies on a “comprehensive surveillance-sharing agreement” according to the SEC
  • The rationale was revealed by Sal Gilbertie, CEO of Teucrium, which was recently awarded a Bitcoin futures ETF
  • Gilbertie says that such a development is years away

The CEO of a U.S.-based ETF provider has revealed why the Securities and Exchange Commission (SEC) continually rejects spot Bitcoin ETFs. Sal Gilbertie, CEO of Teucrium, told CNBC’s ETF Edge that a key paragraph in a recent letter confirming the company’s Bitcoin futures ETF explained what the SEC needed to see before awarding a coveted spot Bitcoin ETF. The answer? It’s all down to the exchange.

SEC Continues to Have Manipulation Worries

Teucrium was given the green light to issue a Bitcoin futures ETF last month, and Gilbertie revealed that a paragraph in the confirmation letter pointed to a specific area of concern for the SEC over a spot Bitcoin ETF surround market manipulation:

If, however, an exchange proposing to list and trade a spot bitcoin [product] identifies… the regulated market with which it has a comprehensive surveillance-sharing agreement, the exchange could overcome the Commission’s concern…

As Gilbertie explained to ETF Edge, the wording means that Bitcoin ETF applicants have much more chance of being awarded a Bitcoin ETF if they “institute…comprehensive surveillance agreements with the ETF listing exchanges.” This echoes past comments from the SEC about the potential manipulation of Bitcoin alongside the ownership of large amounts by ‘whales’.

While it may be good news that the cloak may have been lifted with regard to the sEC’s demands, Gilbertie was not convinced of the effectiveness this approach:

It would take years. The SEC is not going to succumb to that kind of pressure… unless you get a change in leadership who have a sea-change in how they are looking at things… they want to see crypto coins completely surveilled… I don’t see how they’re going to back down from that when they’re all about investor protection.

We already knew that a Bitcoin ETF was unlikely in 2022, and unless an exchange such as Grayscale is willing to undergo such stringent oversight, 2023 may be in doubt too.