Cboe exchange to partner with Coinbase on bitcoin market surveillance in ETF push

Exchange operator Cboe Global Markets (CBOE.Z) on Tuesday filed amended applications to list and trade shares of three spot bitcoin exchange-traded funds, including one by Fidelity, to add surveillance-sharing agreements with crypto-trading platform Coinbase (COIN.O). Shares of Coinbase closed up 9.8% at $89.15 on Tuesday and hit their highest level since Aug. 16 of last year. The U.S. Securities and Exchange Commission has rejected dozens of spot bitcoin ETFs in recent years, regularly saying the exchange proposals do not meet standards designed to prevent fraudulent and manipulative practices and protect investors and the public interest. To meet the standards, an exchange could show it “has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets,” the SEC said. Nasdaq (NDAQ.O) on June 29 refiled an application with the SEC to list a spot bitcoin ETF by BlackRock (BLK.N), the world’s largest asset manager, which also included a surveillance-sharing agreement with Coinbase. Cboe had earlier said it expected to reach such an agreement with Coinbase, which attracted roughly half of U.S. dollar-bitcoin trading in May on its platform. The SEC last month sued Coinbase for failing to register as an exchange and evading disclosure requirements meant to protect investors, as part of a wider crackdown on crypto intermediaries. Coinbase said in a letter filed last month in Manhattan federal court that it will ask a judge to toss the SEC lawsuit, arguing the regulator lacks authority to pursue civil claims because the crypto assets trading on its platform are not “investment contracts,” and thus not securities.