Cryptocurrency exchange Coinbase said it’s prepared to move quickly if a spot Bitcoin ETF is approved soon, highlighting its poise during an earnings call on Thursday with investors and analysts.
“We are ready to hit the ground running,” Coinbase COO Emilie Choi said. “They should add credibility to the market, and we should see increased liquidity and market stability, as we’ve seen with other asset classes, such as a gold ETF.”
Crypto moguls, such as the Winklevoss twins, have pursued ETF-like products that let investors gain Bitcoin exposure in a brokerage account for more than a decade. The Securities and Exchange Commission (SEC) has hesitated to approve one thus far.
However, the hype has hit new levels this year, in light of Grayscale’s courtroom victory and several financial giants, such as BlackRock and Fidelity, that have thrown their weight into the mix of ETF hopefuls. JP Morgan analysts think it’s “most likely” that a spot Bitcoin ETF is approved within the next three months.
While influential figures in the digital assets realm, such as MicroStrategy co-founder and Executive Chairman Michael Saylor, have spoken at length about a spot Bitcoin ETF’s potential to send prices soaring, Choi’s remarks underscore stability.
As a spot Bitcoin ETF makes it easier for institutional investors to trade Bitcoin—without needing to worry about self-custody—greater stability for an asset class that’s known to be volatile should be expected, 3iQ Head of Research Mark Connors told Decrypt.
“Institutions have a different cadence of investment, where they rebalance across multi-asset portfolios,” he said. “Institutions tend to dampen the spikes and support the troughs—that is institutional, multi-asset investment 101.”
In simple terms, Connors said that a spot Bitcoin ETF would enable institutions to easily sell into any demand that arises from an outsized gain. Conversely, he said institutions would rebalance their portfolios if Bitcoin sees an outsized loss.
Pointing to the impact that SPDR Gold Trust ETF (GLD) had on the asset when the gold-based ETF made its Wall Street debut in 2004, Connors said that the liquidity associated with the institutional adoption of an asset class breeds stable markets.
On its earnings call with analysts on Thursday, Choi spoke about Coinbase’s unique position as a slated custodian for several spot Bitcoin ETFs—and how the product would yield the exchange an additional source of revenue.
“Coinbase is very proud to have been selected to partner with the majority of the potential issuers, who are among the world’s most trusted financial institutions,” she said. “The primary way that we will monetize ETFs directly in the near term is through custody fees.”
At the same time, a spot Bitcoin ETF’s potential to broaden access among retail investors and expand crypto ownership in the U.S. was noted by the Coinbase COO.
“One stat that I find really powerful is that 52 million Americans own crypto today despite the current regulatory overhang,” she said. “So, imagine what will happen once ETFs are introduced and widely available.”
Edited by Andrew Hayward