Cryptocurrency exchange Coinbase says spot bitcoin exchange-traded funds (ETFs) could add billions of dollars to the total crypto market cap. Coinbase also believes that the chances of one or more spot bitcoin ETFs being approved by the U.S. Securities and Exchange Commission (SEC) before the end of 4Q23 “have sharply improved.”
Coinbase’s Spot Bitcoin ETF Prediction
Coinbase Institutional, a division of crypto exchange Coinbase (Nasdaq: COIN) that provides solutions for institutional investors, released its November Monthly Outlook titled “Why an ETF Matters” on Sunday.
David Duong, Head of Institutional Research at the cryptocurrency exchange, detailed that spot bitcoin exchange-traded funds (ETFs) can take BTC “further into the mainstream, putting it within reach of millions of investors in broker-dealer, RIA [registered investment advisor] and tax-advantaged account structures.” He continued:
In the long run … spot bitcoin ETFs could add billions of dollars to the total crypto market cap as well as spark new potential investments for the asset class.
“While this will take time, we expect [spot bitcoin] ETFs to lay the foundation for a more regulated environment, greater inclusion, and a material growth in demand,” he opined.
“The impact of one or more spot bitcoin ETF approvals are significant, as it will open up a massive opportunity for the wealth management community, which handles over a third of all wealth in the U.S.,” the Coinbase head of institutional research described. “Moreover, we think ETFs can potentially lead to new financial products (like lending and derivatives).”
The Coinbase report further details:
In our view, chances have sharply improved that one or more spot bitcoin exchange-traded funds (ETFs) may be approved by the U.S. Securities and Exchange Commission (SEC) before the end of 4Q23.
“Typically, the SEC extends its decision window to the furthest extent allowed by its regulatory framework, which in this case would be the final deadline of January 10, 2024, for the ARK-21Shares Bitcoin ETF application,” the Nasdaq-listed crypto exchange explained. “However, the current timeline has been complicated by gridlock in the U.S. House of Representatives. A potential government shutdown on November 17 would furlough over 90% of SEC staff. As a result, we think there is currently an open window for the SEC to be proactive ahead of a possible shutdown.”
Coinbase further noted, citing Bloomberg Intelligence: “In recent weeks, we’ve seen a number of applicants amend their prospectuses with updated language, suggesting meaningful dialogue between these teams and the SEC. Although this is commonplace for such applications in other asset classes, this is a first for crypto.”
Do you agree with Coinbase that spot bitcoin ETFs will add billions to the crypto market cap and do you think the SEC will approve some applications this year? Let us know in the comments section below.