- The SEC is likely to approve a bitcoin ETF soon according to Coinbase’s chief legal officer, citing the SEC’s recent court loss regarding a bitcoin ETF and major financial institutions applying.
- A bitcoin ETF would allow mainstream investors to gain bitcoin exposure without direct ownership, potentially boosting demand. Coinbase stands to benefit.
- After plunging in 2022, bitcoin has rebounded 72% year-to-date partly due to anticipated less hawkish Fed policy and the upcoming bitcoin halving. Crypto trading volumes remain low post-FTX.
Coinbase is confident that the SEC will soon approve a bitcoin exchange-traded fund (ETF), according to the company’s chief legal officer Paul Grewal.
The Basis for Optimism
Grewal cites the SEC’s recent court defeat as a key reason he believes bitcoin ETF approval is likely. Specifically, a judge ruled that the SEC had no grounds to deny Grayscale’s application to convert its bitcoin fund GBTC into an ETF. After declining to appeal this ruling, it seems probable the SEC will now greenlight a bitcoin ETF.
Grewal notes that the companies applying for bitcoin ETFs include major financial institutions, further supporting the notion their proposals will be approved. While the final decision lies with the SEC, Grewal believes they will now fulfill their legal obligations and advance one or more bitcoin ETF applications.
The Significance of a Bitcoin ETF
A bitcoin ETF would enable mainstream investors to gain exposure to bitcoin without directly purchasing the cryptocurrency. This could boost demand from retail investors interested in bitcoin but hesitant to buy it outright.
As a leading crypto exchange, Coinbase stands to benefit from bitcoin ETF approval. Coinbase stock is commonly held by investors wanting crypto exposure without direct ownership.
Cautious Optimism on GBTC
While Grayscale’s bitcoin fund may still convert to an ETF, its parent DCG faces accusations of defrauding investors. However, Grewal remains upbeat about additional bitcoin ETFs being approved soon.
Bitcoin’s Comeback in 2023
After huge declines in 2022, bitcoin has risen 72% year-to-date. Contributing factors include anticipation of less hawkish Fed policy and the upcoming bitcoin halving.
Still, crypto trading volumes are down given minimal volatility and the crypto industry’s loss of confidence after the FTX collapse.
Accountability for Bad Actors
Commenting on FTX’s downfall, Grewal said he’s encouraged that fraud in crypto is being prosecuted. He believes forthcoming developments will renew interest in the space.