A legal dispute between Coinbase and SEC could ban the approval of Bitcoin spot ETFs

Last updated December 23, 2023

The US securities regulator questioned BlackRock’s decision to use Prime Execution Agent for the IBIT product.

BlackRock is the best fund manager in the world and currently its team is handling the Bitcoin spot ETF product iShares Bitcoin Trust ETF (IBIT). According to ETF experts, the US Securities and Exchange Commission (SEC) may give a green signal to several Bitcoin spot ETF products, including IBIT, before January 10, 2024.

As we know, BlackRock named Coinbase as a custodian in its June filing with the SEC for its Bitcoin spot ETF product, but did not provide any name for its Prime Execution Agent” (a third-party broker that handles Bitcoin trades for its ETF funds handles).

According to reports, the SEC body has expressed concern over the possible scheme of third-party brokers. The SEC agency does not fully support this approach. However, the SEC body is not in favor of this approach, but BlackRock has confirmed in its filing that it will follow this approach.

According to some ETF experts, the SEC body has tried that power the Bitcoin spot ETF applicants to use the “Cash Create” method of creating ETF shares instead of the “in-kind” method.

However, the majority of top ETF experts are still strong in their prediction that the SEC body will approve these applications in January 2024, but some people noted that the Coinbase exchange is already in conflict with the SEC body and that this can cause some speed bumps. on the path of Bitcoin spot ETF application approval.

In June this year, the SEC body will charge the Coinbase exchange fees for offering unregistered securities assets and running an unregistered national securities exchange.

Today we have Coinbase, Inc. accused of operating its crypto asset trading platform as an unregistered national securities exchange, broker and clearing agency and for failing to register the offer and sale of its crypto asset staking program as a service.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v

— U.S. Securities and Exchange Commission (@SECGov) June 6, 2023

Now it will be interesting to see how the SEC body will tackle this issue. Whether the SEC body will force BlackRock to go with another custodian or something else.

Notably, Coinbase (COIN) investors are confident in their investment despite Coinbase’s legal conflict with the SEC body.

The current trading price of COIN stock is 4.5% higher than the trading price of the last 24 hours, thanks to market conditions and Coinbase’s strong and sound approach in the legal battle against the SEC agency.