- Spot Bitcoin ETFs would likely divert capital away from crypto exchanges.
- Brian Armstrong argues that there is a net between Coinbase and the industry.
- The race for ETF approval remains a dominant crypto narrative.
Looming spot Bitcoin ETFs have the potential to benefit the entire crypto ecosystem by opening up previously untapped channels of capital. However, this may spell disaster for established crypto exchanges, as revenue diverts to legacy money managers providing spot ETF products. Despite this, Coinbase CEO Brian Armstrong believes the growth fostered by spot ETFs would be a net positive for the crypto industry as a whole.
Coinbase Can Still Thrive
In a recent interview with CNBC, Armstrong addressed concerns that a spot Bitcoin ETF would be detrimental to Coinbase’s bottom line by saying it would benefit the crypto industry. Armstrong highlighted that a spot BTC ETF would enable capital inflows from areas of the economy that cannot invest in crypto.
Sponsored
In addition, Armstrong mentioned that Coinbase is set to provide custodian services to most spot Bitcoin ETFs, which would open up a new revenue stream for the company.
When pressed on the specific negative effects of spot BTC ETFs on Coinbase, Armstrong emphasized the net benefits of unlocking new capital channels from well-funded sources, such as institutions and pension providers.
“Our goal with crypto is to get it plugged into all areas of the economy. We want the massive pools of capital out there in endowments, institutions, pension funds, they should all be able to participate in this new asset class. So I think mostly it will be a complement,” responded Armstrong.
As the US Securities Exchange Commission (SEC) continues to mull over the flood of spot ETF applications, the latest development in the race for approval saw BlackRock amend its application to tip the scales in its favor.
BlackRock Makes ETF Amendment
On December 18, BlackRock submitted an amendment to its spot ETF application to address the SEC’s concerns about market manipulation. The change will see fund redemption become cash-only, removing the ability for investors to convert holdings to Bitcoin. BlackRock stated that it hopes the SEC will allow BTC redemption in the future.
BlackRock ETF filing in June triggered other asset managers to follow suit despite the SEC having rejected every spot BTC ETF application to date. The company has a near 100% ETF approval rate, which, along with its standing as the world’s asset manager, makes it a formidable player in the race for approval.
On the Flipside
- There is no guarantee that the SEC will approve a spot BTC ETF.
- Investor Mike Alfred puts the odds on an ETF approval before January 10, 2024, at 99%.
- Buying Bitcoin directly on Coinbase or another exchange, rather than gaining exposure via an ETF provider, better suits retail investors who value asset ownership.
Why This Matters
Spot BTC ETFs would likely foster an overall net benefit for the crypto industry, particularly as crypto is a nascent and ever-evolving industry with plenty of room for expansion.
Read about the latest development in Coinbase’s bid to bring fairer regulatory treatment to crypto here:
SEC Rejects Coinbase Petition for Tailored Crypto Regulation
Find out about VeChain’s bid to re-establish itself as a relevant protocol here:
Sleeping Giant VeChain Suddenly Wakes from Slumber
