Coinbase, the San Francisco-based cryptocurrency exchange, known for its wide-ranging business model that includes asset management, venture capital trading and brokerage, is now looking to step foot into creating an exchange-traded fund tied to cryptocurrencies. The news comes amidst a crucial bear period for cryptocurrencies, especially Bitcoin, which has depleted past the $6,500 mark over the past week. Many believe that creation of a publicly-traded ETF is the only way to revive the slumping market. Those close to Coinbase believe that the company is setting its eyes into ETF establishment in a bid to attract retail investors to gain access to the volatile crypto market via the stock exchange.
It is important to note that the planned ETF will likely track a variety of cryptocurrencies, not just Bitcoin, possibly indicating that the firm is continuing to look at more crypto assets to add to its already expansive ecosystem.
However, having seen the U.S. Securities and Exchange Commission (SEC) on a crypto-ETF rejection spree, the chances of approval seem low.
‘Better call BlackRock’
In this regard, Coinbase has been recently engaged in negotiations with individuals from New York-based multinational investment management corporation BlackRock. The WallStreet firm, having worth over $6.3 trillion in assets under management, has previously been touted to be making a foray into the cryptocurrency and blockchain industry.
BlackRock has its own derivative of a blockchain group, which was created in 2015 to identify blockchain-related technology application in financial services. It is still unclear whether the talks between two multi-million companies we a one-off or part of ongoing conversations. While BlackRock does not seem to have an interest in becoming a crypto fund issuer itself, they will mainly partner Coinbase in an advisory capacity in its ETF endeavors.
CEO BlackRock Larry Fink has been quoted referring Bitcoin as an “index of money laundering” while representatives from both parties have remained tight-lipped upon being asked for developments by BlockPublisher.
However, Thomas Power, Blockchain and crypto expert shed light on the matter and appreciated the overall emerging intent to get an ETF approved once and for all.
yes I think it will (make a difference) and this is a good sign for the SEC to get a handle on and pilot in 2019 might even be the catalyst that makes the market although timing impossible to predict.
Long odds for ETF acceptance
Coinbase’s intent may be strong, but the chances of getting an ETF approved by U.S. SEC have never looked worse. On August 22nd, SEC rejected nine applications for a bitcoin ETF, citing proposals to have ‘lacked protections from fraudulent and manipulative acts and prices’.
BlackRock’s involvement becomes ever-more crucial in this respect, as the evidently well-established financial institution, granting market analysis and other legal advisory may prove to be crucial in steering an ETF approved in the near future. The Coinbase-BlackRock merger further supports the idea that crypto appeal in WallStreet is gathering more and more momentum.
It remains to be seen if Coinbase’s plans to pursue ETF creation continue, which will put Coinbase par to par with the likes of rival exchanges Gemini, Bitwise Asset Management and VanEck looking to create a crypto ETF.