An Information-Sharing Agreement: What You Need to Know
An information-sharing agreement is a crucial component of recent spot bitcoin ETF filings. Unlike surveillance sharing, which allows suspicious trades to be flagged to authorities, an information-sharing agreement gives regulators the power to demand additional background information. The agreement flips the power dynamic, allowing regulators and ETF providers to pull data from the exchange rather than relying on the exchange to push surveillance data. Included in this data can be specific trade or trader information, and even personally identifiable information (PII) such as names and addresses. However, information-sharing requests must be specific and not be fishing expeditions. The inclusion of an information-sharing agreement is significant because it means the ETF is not reliant on an unregulated market. Brokers and exchanges in equities markets are familiar with this structure, where regulators can request more information about clients’ trading history.
Key Points:
- Information-sharing agreements are absent from public spot bitcoin ETF filings
- These agreements allow regulators and ETF providers to pull data from exchanges
- Regulators can request specific trade or trader information, including personally identifiable information (PII)
- An information-sharing request must be specific and not a fishing expedition
- The inclusion of an information-sharing agreement means the ETF is not reliant on an unregulated market
Hot Take:
The inclusion of information-sharing agreements in spot bitcoin ETF filings is a significant development. By allowing regulators to demand data from exchanges, it creates a more transparent and regulated environment for ETFs. While this may go against the ethos of cryptocurrency traders who value privacy, it is a necessary step for ETF approval. The SEC’s acceptance of this structure will not only boost the chances of approval for these ETFs but also demonstrate their commitment to overseeing the market and protecting investors. This move could be a positive step towards wider cryptocurrency adoption and increased trust in the market.
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