Coinbase shares surge 13 percent on Cboe’s Bitcoin ETF announcement

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Coinbase’s shares experienced a 13 percent increase on Monday following an announcement by exchange operator Cboe to launch a spot Bitcoin exchange-traded fund (ETF). The shares closed with an 11.7 percent increase, reaching $79.93.

A Bitcoin ETF is a type of investment vehicle designed to mirror the price movement of Bitcoin. Unlike cryptocurrencies traded on specific digital exchanges, holders can buy and sell Bitcoin ETFs on regulated securities exchanges.

It offers both institutional and retail investors the opportunity to invest in Bitcoin without needing to manage their own Bitcoin wallet, engage with cryptocurrency exchanges or be concerned about the associated security risks.

Cboe had recently resubmitted an application to the U.S. Securities and Exchange Commission for a Bitcoin ETF, with asset manager Fidelity named in the filing. The application mentioned Coinbase as the crypto platform that would assist in detecting market manipulation in the ETF.

This move aims to address concerns raised by the SEC regarding the omission of crypto-trading platforms in the original filing, saying they weren’t specific. However, Cboe’s filing now identifies the crypto-trading platforms responsible for helping detect fraud in the underlying Bitcoin markets.

Nasdaq also faced similar concerns from the SEC for a spot Bitcoin ETF by BlackRock. The SEC has rejected numerous spot Bitcoin ETF applications in the past, citing inadequate measures to prevent fraudulent practices and safeguard investors.

As a result, the world’s largest cryptocurrency by market capitalization experienced a significant decline on Friday morning. Its price dropped from above $31,000 to briefly dip below $30,000. It showed a rapid decrease of approximately 3 percent within minutes.

Other asset managers follow suit with ETF applications

The announcement of BlackRock and Fidelity filing for Bitcoin ETFs also contributed to the recent surge in Bitcoin’s value. The company’s stock value has more than doubled this year. It surged to a one-year high following the filing announcements.

Several other prominent asset managers, including WisdomTree, Invesco, Bitwise and ARK Invest, have also taken similar steps. The managers either resubmitted or updated ETF applications with their own surveillance-sharing agreements.

None of these firms have received approval from the SEC to list a spot Bitcoin ETF. However, there has been a notable rise in interest from institutional investors in cryptocurrency, said Crypto News Flash.

Regulatory crackdown

The filings came in the wake of a regulatory crackdown on the digital asset sector. Last month, the SEC filed lawsuits against Coinbase and Binance for alleged rule violations. Both platforms deny the allegations.

SEC also classified tokens such as BNB (BNB), Binance USD stablecoin (BUSD), Axie Infinity (AXS), Solana (SOL), Decentraland (MANA), Cardano (ADA), Polygon (MATIC), The Sandbox (SAND), Algorand (ALGO), Coti (COTI) and Cosmos Hub (ATOM) as securities.

As a result of the enforcement action, many of these coins’ value experienced a decline. It led investors to suffer losses amounting to several million dollars.

Bitcoin also experienced a sharp drop earlier in June but quickly recovered on the day after. The price level is even considerably higher compared to the lows of the broader industry decline last year, often called “crypto winter.”

The SEC’s recent actions are having an impact on public perception, according to Dennis Kelleher, President of Better Markets, an advocacy group that has been advocating for stricter regulations within the crypto industry.

Kelleher emphasizes that the SEC’s actions serve as a clear and strong warning to the public. The SEC advised potential buyers to exercise caution.