Shares of Coinbase (NASDAQ:COIN) stock are flying higher by over 10% today. This comes as the cryptocurrency exchange has reached a surveillance-sharing agreement (SSA) agreement with Chicago Board Options Exchange’s (CBOE) BZX Exchange for five of its Bitcoin (BTC-USD) exchange-traded fund (ETF) applications.
The SSA will allow the Securities and Exchange Commission (SEC) to obtain information such as trading and market activity, as well as customer identification. Furthermore, the SEC believes that a SSA can deter market manipulation. When filing an SSA, the SEC looks for “a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.”
In addition, CoinDesk reported that Nasdaq has also reached an agreement with Coinbase. Nasdaq is the exchange that is sponsoring BlackRock’s (NYSE:BLK) Bitcoin ETF application.
COIN Stock Rises Higher on SSA News
According to the SEC, the SSA is not the only way a spot Bitcoin ETF applicant can satisfy Section 6(b)(5) of the Exchange Act. However, the commission states that “such agreements have previously provided the basis for the exchanges that list commodity-trust ETPs to meet those obligations, and the commission has historically recognized their importance.”
Some people are concerned that the SEC will ask for an information-sharing deal, which gives it more power than a SSA. An information-sharing deal will allow the SEC to pull information from an exchange, while a SSA will only allow it to receive information, or be pushed information, somewhat similar to a subpoena. Either way, crypto enthusiasts are not too keen on either process due to privacy concerns.
Last month, the SEC charged Coinbase with allegedly providing unregistered securities through its platform. Shortly after, Coinbase filed a motion to dismiss the lawsuit and to be granted judgement in favor of its claims. The crypto exchange argued that its due process rights were violated, and that the charges fell outside of the SEC’s powers. Since then, COIN stock has surged higher by about 70%.
The SEC responded by stating that it would oppose any motion for judgement filed by Coinbase. A hearing for the company’s motion for judgement will take place on July 13 in New York.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
