Coinbase: Spot ETFs will usher in a new chapter for cryptocurrencies, enabling diversified long-term growth
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Coinbase: Spot ETFs will usher in a new chapter for cryptocurrencies, enabling diversified long-term growth
Spot cryptocurrency ETFs will continue to attract a diverse new investor base, driving long-term growth and product innovation.
Navigating Web3 tides with focused insightsAuthors: Greg Tusar, Brett Tejpaul
Translation: TechFlow
This article was updated on July 22, 2024, regarding the U.S. Securities and Exchange Commission (SEC) approving nine spot Ethereum (ETH) ETFs.
In brief: Spot cryptocurrency ETFs are now live in the United States—another sign that the future of digital currency is here. The SEC’s July approval of nine spot ETH ETFs marks a significant milestone in the evolution of the crypto economy. As demonstrated by the launch and success of spot Bitcoin ETFs, spot crypto ETFs will continue to attract diverse new investor groups, driving long-term growth and product innovation. At Coinbase, we’re focused on building the most trusted crypto products to meet this moment, expand access to cryptocurrency, and help usher in a new financial system.
Today, the SEC approved applications for nine spot ETH ETFs.
Following the January approval of Bitcoin ETFs, the greenlighting of spot ETH ETFs marks another key milestone for cryptocurrency, reflecting ongoing innovation around crypto assets and an increasingly mature regulatory environment.
Overall, ETFs provide investors with a pathway to gain exposure to spot cryptocurrencies through familiar, regulated products. In short order, spot Bitcoin ETFs have already proven their significance, ushering in a new wave of crypto adoption. To date, spot Bitcoin ETFs have attracted $17 billion in net inflows, making them the fastest-growing ETFs in history.
For investors, spot ETH ETFs offer a unique investment opportunity in a distinct crypto asset with differentiated return characteristics. The Ethereum ecosystem is robust, with over 15 million monthly active addresses, and rapidly expanding—smart contract deployments grew 300% in 2023 alone. By increasing access to Ethereum, spot ETH ETF investors will contribute to enhancing Ether’s utility and advancing the broader crypto ecosystem.
Coinbase is proud to serve as a trusted partner and custodian for 10 spot Bitcoin ETFs and eight of the nine newly approved ETH ETFs. With over 12 years of experience safeguarding digital assets at scale, we’ve developed a leading institutional-grade custody solution and will continue our company-wide mission to be the safest, simplest, and most trusted bridge to the crypto economy.
Below is the original text from January 10, 2024:
Today, the SEC approved applications for 11 spot Bitcoin ETFs from both traditional finance and frontier crypto financial providers. Approvals for spot Ethereum ETF applications may soon follow. These ETFs will not only give investors access to spot cryptocurrency through familiar, regulated products but also drive a new wave of crypto adoption led by the world’s largest asset managers.
Even before today’s announcement, enthusiasm for spot Bitcoin ETFs had been building among institutional and retail investors alike. Even prior to this news, the status of cryptocurrency as an asset class is undeniable. More than 5% of the global population—approximately 425 million people—own cryptocurrency. In the U.S., 52 million Americans hold crypto. Today’s approval is the latest step in a global shift toward digital assets, helping to drive the renewal of the financial system itself.
Cryptocurrency is here to stay, and spot Bitcoin ETFs will further accelerate its adoption.
Introducing a Diversified Investor Base
Total household wealth in the United States exceeds $154 trillion, with more than one-third—about $58 trillion—managed by financial advisors, banks, and broker-dealers. Yet, despite demand from investors (including financial advisors), until now, much of this capital lacked direct access to spot cryptocurrency investments.
According to data from the Digital Assets Council of Financial Professionals (DACFP), nearly half of U.S. financial advisors personally own Bitcoin, but only 12% recommend it to clients—primarily due to the lack of an ETF.
Earning the Trust of the World’s Largest Asset Managers
Over Bitcoin’s 15-year history, traditional financial institutions have gradually embraced crypto innovations—from blockchain technology to tokenization. Spot ETFs represent the largest endorsement yet from major asset management firms.
The 11 firms approved to offer spot Bitcoin ETFs manage over $16 trillion in assets. They see cryptocurrency delivering multiple benefits to clients, including serving as a hedge during turbulence in traditional financial markets, enabling portfolio diversification, and mitigating the impact of expansionary fiscal and monetary policies.
By offering investors convenient and familiar access to spot cryptocurrency, ETFs will bring crypto within reach of millions of new investors and further cement its status as a mainstream asset.
Driving Innovation and Market Expansion
Spot ETFs will foster further growth and innovation, expanding the size and depth of the crypto market. ETF markets do not operate in isolation. Every time a spot ETF is bought or sold, market makers must trade the underlying asset—meaning spot Bitcoin ETFs will increase trading and liquidity in Bitcoin itself. As liquidity grows, so does investor interest, creating even more liquidity—a virtuous cycle.
The widespread adoption of ETFs in client portfolios is expected to spark the creation of innovative financial products such as lending and derivatives, which could use regulated ETFs as underlying collateral.
Validating Our Strategy
In crypto, we often talk about moments that happen “gradually, then suddenly.” At Coinbase, we’ve focused on the “gradual”—because we knew the “sudden” would come. For over 12 years, we’ve been steadily building the most trusted and user-friendly products in crypto. Then, suddenly, we became the custodian of choice for many of the approved spot Bitcoin ETFs. We’re proud to be selected by leading traditional and crypto-native financial institutions worldwide to support their spot Bitcoin ETF offerings.
In a world accustomed to rapid developments in crypto, we must remember that some efforts take time to bear fruit. Good things come to those who wait. Spot Bitcoin ETFs are the result of years of work across the industry—leveraging new technologies and infrastructure. The impact on markets and financial systems takes time to unfold. But we firmly believe that, years from now, January 10, 2024, will be seen as a pivotal moment in Coinbase’s journey and a giant leap forward for the crypto economy.
We’re excited for the next phase of this growth and actively preparing for it. Cryptocurrency—and Coinbase—are just getting started.
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