Coinbase and Blackrock in Talks- Another Bitcoin ETF?
Joining in on the market frenzy around cryptocurrency ETFs are two market behemoths – Coinbase and Blackrock. Lately, cryptocurrency exchange platform, index and fund operator, Coinbase has been in talks with Blackrock. Blackrock (BLK) currently manages over $6 billion worth of Wall Street assets. Meanwhile, Coinbase has the necessary expertise in cryptocurrency. Blackrock has tremendous insight and hold on the market for exchange-traded funds through its iShares subsidiary. Together, the synergy hints at the development of a cryptocurrency ETF. However, the probability of the launch of a Bitcoin ETF continues to hinge on the SEC’s (Securities & Exchange Commission) approval.
Coinbase to Expand its Retail and Institutional Investor Base
Coinbase’ current offerings include a cryptocurrency trading platform, an ERC-20 token wallet, and a cryptocurrency index fund tracking GDAX trading assets. The crypto index fund is currently open to accredited US investors. Assets in the index are weighted by market capitalization (see chart below).
In June, we compared the Coinbase Index Fund to Grayscale’s Digital Large Cap Fund. Since its inception, the Coinbase fund has been charging 2% fees, which is still lower than the 3% charged by the Grayscale fund. To sweeten the deal further, the company has recently proposed reducing its index fund’s annual management fee by 1% “for all new and existing investors.” There now seems to be nothing stopping Coinbase from expanding its institutional investor base for cryptocurrency.
On the retail side, Coinbase already has a ready investor base actively trading on its crypto platform and wallet. A crypto ETF would definitely serve well to expand Coinbase’s existing retail investor base, while pulling in additional institutional clients. Thus, the launch of an exchange-traded fund (ETF) to provide retail investors with single or diversified exposure to the cryptocurrency market, from the company’s asset management wing, seems quite probable.
All Eyes on the SEC
Meanwhile, all eyes remain on the SEC’s review, waiting to see whether the securities regulator will choose to finally allow crypto ETFs to launch and begin trading on US exchanges. As per the SEC’s latest statement in this regard, the commission will be reviewing its decision of the 9 ETFs that had been submitted to it for approval. However, on August 22nd, the commission rejected the applications for these crypto ETFs.
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