Nasdaq's website also showed a filing with the SEC dated Monday relating to the Valkyrie Bitcoin Fund, which said the exchange on June 30 had executed a term sheet with Coinbase to enter into a surveillance-sharing agreement.
In addition, Cboe Global Markets' website reflected updated filings with the SEC dated June 30 related to Fidelity Investments' Wise Origin Bitcoin Trust, the WisdomTree Bitcoin Trust, the VanEck Bitcoin Trust, the Invesco Galaxy Bitcoin ETF and the ARK 21Shares Bitcoin ETF. Each indicated that the Cboe BZX Exchange is expecting to enter into a surveillance-sharing agreement with Coinbase.
"I think everybody's interpretation of this is that Coinbase is sort of becoming the bridge between DeFi and TradFi," said Eric Balchunas, Bloomberg Intelligence senior ETF analyst, in an interview Wednesday using terms short for decentralized finance and traditional finance.
The SEC has yet to approve a spot bitcoin exchange-traded product. However, in disapproval orders such as the one it issued March 10 regarding the VanEck Bitcoin Trust, the SEC has said an exchange can meet its obligations by demonstrating that it has a "comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets."
On June 6, the SEC charged Coinbase with operating its crypto asset trading platform as an unregistered national securities exchange, broker and clearing agency, an SEC news release said. Coinbase is the largest crypto asset trading platform in the U.S., the SEC's complaint said.
While Coinbase to some may seem an unlikely choice for surveillance-sharing agreements given the SEC's complaint against it, "maybe it's the least dirty shirt according to the SEC," Mr. Balchunas said, adding that "from what I've heard, Binance is even worse in the SEC's eyes."
On June 5, the SEC filed charges against defendants including Binance Holdings Ltd. and its founder, Changpeng Zhao, alleging a variety of securities law violations. Binance operates the world's largest crypto asset trading platform, an SEC news release said.
Binance did not respond to an emailed request for comment.
"I could see it being in (Coinbase's) interest to do some of the things the regulators want in order to get this ETF thing off the ground because if they do, this is a lot of volume," Mr. Balchunas said. "This is like gigantic amounts of money that will be sort of leaning on their exchange. So, from a business purpose, I could see them wanting to do this."
That said, it's possible that Coinbase feels "a little internal tension between totally giving into the traditional finance world when they're supposed to be sort of the rebel DeFi people," he said.
Still, "I think it looks like they're leaning more towards just sort of becoming that bridge and making some concessions in order to do so," Mr. Balchunas said.
A spokesman for Coinbase declined to comment.
