Cryptocurrency exchange Coinbase announced during an earnings call that it is ready to take action if a spot Bitcoin exchange-traded fund (ETF) is approved in the near future. Coinbase COO Emilie Choi stated that the approval of a Bitcoin ETF would bring credibility to the market and increase liquidity and market stability, similar to the impact seen with the introduction of a gold ETF. While the Securities and Exchange Commission (SEC) has hesitated to approve a Bitcoin ETF, the enthusiasm surrounding it has grown this year, with Grayscale’s legal victory and the interest of financial giants like BlackRock and Fidelity. JP Morgan analysts believe that a spot Bitcoin ETF is likely to be approved within the next three months.
The potential of a spot Bitcoin ETF to stabilize the market was emphasized by Choi’s remarks. As institutional investors would have an easier way to trade Bitcoin without the need for self-custody, greater stability in an otherwise volatile asset class can be expected. This perspective was supported by 3iQ Head of Research Mark Connors, who explained that institutional investors rebalance their portfolios across various assets, which helps dampen extreme spikes and support market troughs. He compared the potential impact of a Bitcoin ETF to that of the SPDR Gold Trust ETF’s effect on the gold market, bringing liquidity and stability.
Coinbase highlighted its unique position as a designated custodian for several spot Bitcoin ETFs during the earnings call. Choi mentioned that Coinbase has been selected to partner with trusted financial institutions and expressed pride in the role the exchange will play. Monetization of ETFs will primarily come through custody fees. In addition to benefiting Coinbase, a spot Bitcoin ETF has the potential to expand access for retail investors and increase crypto ownership in the United States, as 52 million Americans already own cryptocurrency despite regulatory uncertainties.