BlackRock Pushes Boundaries of Surveillance with Bitcoin ETF Application

On Jul 12, 2023

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Details have emerged from Blackrock’s Bitcoin ETF application that reveals that a cryptocurrency exchange is required to share trading data and personal information about its customer base.

It is likely a move by Blackrock to give more power to the SEC in a bid to get its ETF application accepted.

BlackRock’s Bitcoin ETF Application Had Crypto Watchers Paying Close Attention

Blackrock’s ETF application came at a time when the SEC was rejecting applications left and right, which would be in line with its rejecting most applications. People still remember Grayscale.

The world’s biggest asset management company filed its application in June 2023, using the Coinbase (COIN) custody for the ETF. The company has already been working with Coinbase to make crypto assets available for institutional investors.

The news of Blackrock filing a Bitcoin ETF application made two types of waves across the crypto space. One of its impacts was seen on Bitcoin’s price charts as BTC finally crossed its $30k resistance and went up by more than 80% from its 2022 lows.

The other wave was that of curiosity among crypto watchers who paid close attention to what Blackrock could do to get the approval through. Their attention veered towards one of the essential elements of the application – the surveillance sharing agreement.

The surveillance sharing agreement (SSA) allows entities to share customer surveillance information. This addition has been made by SEC to allow it to flag any entity if they see any suspicious cryptocurrency trades.

Doing so, BlackRock has attempted to sway SEC’s decision in its favor by giving regulators more power over information.

SSA is not an Information Sharing Agreement

The Surveillance Sharing Agreement is concerned with sharing the data accumulated by the exchange,

That, in the case of Blackrock’s Bitcoin ETF application, would be Coinbase. The crypto exchange, in this case, will be responsible for sharing information with regulatory authorities, listing exchanges, and ETF providers if it encounters any suspicious activity.

It is not an information-sharing agreement, meaning that the information shall only be shared (ideally) if there are any dubious activities detected.

Surveillance details would consist of specific trades. But the agreement goes further and also requires the cryptocurrency exchange to share personally identifiable information, such as customer name and address.

Information Sharing Causing Investors to Worry

The rampant and invasive information sharing that the BlackRock ETF application indicates is not being welcomed by many.

One individual, who chose to remain identified, told Coindesk that crypto traders don’t like having any information shared by them. “It is a sort of anathema to the ethos of crypto in general”, he said.

“But if firms want their ETF application to be successful, they have to do it”, he continues.

The recent surveillance-sharing measure would most likely create an environment of worry about investors.

However, since the news is still a bit fresh, there haven’t been many reactions to it. We will know more as the day goes by.

Will Blackrock’s Bitcoin ETF Application Get Accepted?

With BlackRock providing so much leeway to the Securities and Exchange Commission by giving it more power when it comes to information sharing, it is looking more likely that it will be accepted.

Mark Yusko, the co-host of the popular Margin Podcast, has said that it is likely that only BlackRock will get Bitcoin ETF approval, with SEC playing the kingmaker.

ANALYSIS: Only BlackRock will get spot bitcoin ETF approval? Yusko says it’s a likely possibilityhttps://t.co/UF26K8qxqG
— Blockworks (@Blockworks_) July 11, 2023

This is the new application that was filed by Blackrock. The earlier file was rejected by the SEC when it flagged many flaws in the initial filing. With the latest application, Bitcoin ETF seems to be appeasing SEC. While the results are yet to be known, the approval would likely have a major impact on the crypto market.