The organization is trying to include the supervision of the sharing agreement in the ETF filing. What is the difference between the sharing agreement and the information sharing agreement?

Original author: Mary Liu, compared to BitpushNews

When the financial giant BlackRock applied to launch a Bitcoin ETF in the United States, the crypto community speculated whether the world's largest asset management company had a greater chance of approval compared to those failed "pioneers".

BlackRock's move has prompted a series of followers, with financial companies such as ARK Investment, Valkyrie, and Fidelity also submitting their own Bitcoin ETF applications and including the Supervisory Sharing Agreement (SSA) in almost all filing documents.

The SEC's requirement for shared oversight to prevent manipulation of the crypto market is not new. It first appeared in the Winklevoss brothers' Bitcoin ETF application as early as 2017, but a "Coinbase and Nasdaq Information Sharing Terms Table" obtained by crypto media CoinDesk reveals more details.

Industry insiders believe that theoretically, the Information-Sharing Agreement is more likely to impact the decision of the U.S. Securities and Exchange Commission (SEC), allowing regulators to access additional background information on transactions, undoubtedly giving the SEC more power.

The slight difference between the SSA and the Information-Sharing Agreement can be described as the difference between "push" and "pull".

The SSA focuses on data monitoring conducted by the spot exchange Coinbase, and if deemed suspicious, it can be pushed to regulatory agencies, ETF providers, and listed exchanges.

In contrast, the Information-Sharing Agreement allows regulatory agencies and ETF providers to request data from exchanges.

The relevant information may be related to specific transactions or traders, and the agreement also forces cryptocurrency exchanges to share data, including personally identifiable information (PII), such as customers' names and addresses. The Information-Sharing Agreement does not appear in any Bitcoin ETF filing, but this structure already exists in other markets.

An insider told CoinDesk that an important caveat is that information-sharing requests must be very specific and no different from subpoenas.

This anonymous individual states: "This is not just a fishing expedition, it involves all the information associated with any transaction conducted between two specific points in time. The obvious concern is that cryptocurrency traders, by definition, are not inclined to share information about themselves. This is essentially anathema to the spirit of cryptocurrency. But in order for an ETF to succeed, [company] must do just that."

Bitcoin ETF Application History

As early as 2017, the SEC emphasized that Bitcoin ETF applications needed to sign oversight sharing agreements with larger regulated markets, but companies lacked clarity and objective standards in explaining this point.

Matt Hougan, Chief Investment Officer at Bitwise Asset Management, stated that information sharing agreements make sense compared to simple oversight sharing, as it means the ETF is not reliant on unregulated markets. Bitwise has applied for ETFs multiple times.

In an interview, Hougan said: "Regulators have the authority to extract information from regulated markets, while reporting information comes from unregulated markets. So, the SEC wants regulated markets to oversee this surveillance and identify the users behind these trades, which I think will be a core component of these agreements."

Suspicious Activity Reports

The combination of oversight sharing and information sharing is a structure familiar to stock market brokers and exchanges, where regulators have the right to request more information about the trading history of end customers.

For example, whenever a broker's client sends an order to Nasdaq and that order is flagged as suspicious by the exchange's SMARTS surveillance system, both the broker and the exchange are required to file a Suspicious Activity Report (SAR).

Dave Weisberger, CEO of cryptocurrency trading platform CoinRoutes, states that regulatory authorities investigating SAR can proceed with a "second step" of asking for Personally Identifiable Information (PII) to determine if there are shared beneficiaries behind specific trades, creating a unified audit trail.

Coinbase, Nasdaq, and BlackRock may argue that if suspicious activity is apparent (and they are monitoring for it), regulatory authorities can inquire about who is involved, but they won't willingly disclose Personally Identifiable Information (PII).

Eric Balchunas, an ETF analyst at Bloomberg, predicts in an interview with Cointelegraph that BlackRock should know how to convince regulatory authorities that its involvement increases the likelihood of approval for a Bitcoin spot ETF from 1% to 50%.