Original title:Coinbase Is the Real Winner in the Bitcoin ETF Race—Here’s Why
Original author: Nicholas Morgan, Decrypt
Original compilation: bayemon.eth, ChainCatcher
The race for a Bitcoin ETF is on, with Wall Street giants like BlackRock and Fidelity vying for the title of “first” to offer a spot market product. However, the winner will ultimately share the honor with the partners who helped it cross the finish line.
That partner is likely to be Coinbase.
BlackRock announced on June 15 that it would launch its own spot Bitcoin ETF product in partnership with Coinbase. The $8.5 trillion asset management company designated San Francisco-based cryptocurrency exchange Coinbase as the custodian of the Bitcoin fund, and later amended its filing to state that Coinbase would also provide monitoring sharing services, allowing both parties to Share information about transactions, clearing activities and customer identities to reduce the risk of market manipulation.
Bob Ras, co-founder of asset tokenization company Sologenic, said:"Coinbase may become the exchange of choice in this regard. It is clear,Big players view Coinbase as a legitimate and extremely important institution.
BlackRock isn’t the only Bitcoin ETF applicant to turn to Coinbase for help.All five spot ETF Bitcoin applicants working with the Chicago exchange - Fidelity, VanEck, Ark Invests 21 Shares, Valkyrie and Invesco - have submitted revised applications and named Coinbase as their partner.
Shortly after the SEC filed a lawsuit against Coinbase, accusing it of trading in unregistered securities and engaging in unregistered securities trading through the marking service Coinbase Earn, Coinbase established partnerships with multiple institutions. Although Coinbase previously believed that the SEC’s complaint was false, the lawsuit undoubtedly cast a shadow on Coinbase.
However, BlackRock and other institutions did not seem to take the SEC’s accusations into consideration, and the vote of confidence seemed inclined to choose to believe Coinbase and insist on advancing relevant cooperation. According to industry insiders, although it is unclear what specific impact the SEC’s accusations will have on Coinbase’s recent transactions, even if the accusations are true, they do not seem to affect Coinbase’s ability and influence in the issuance of ETF products.
Joshua Frank, CEO of digital asset information services company The Tie, said Coinbase has been more cautious in conducting business in recent years than some of its peers, so"Caused a lot of trouble", and ETF trading suggests Coinbase’s more cautious approach is paying off.
Frank also mentioned that “I have 200 institutional clients, many of them in the traditional financial sector, and every institution I’ve spoken to has been happy to have Coinbase as a partner.”
This confidence from the industry also helped Coinbase’s stock price rise some time ago. Coinbases stock price began steadily improving from $54 per share after BlackRocks filing, when a federal judge ruled in favor of the SEC in its lawsuit against Ripple, finding that its XRP token was not eligible for use except in certain transactions. Securities, Coinbase stock price surged to $107 on July 13. At press time, the stock last closed at about $98 per share, still higher than where it was on June 6 when the SEC sued Coinbase.
This trust factor is also important as more and more TradFi companies show interest in getting deeper into cryptocurrencies. Jeffrey Blockinger, chief legal counsel at decentralized exchange Vertex Protocol, believes that contacts in the traditional financial world have expressed interest in Bitcoin to him, but they often"not interested"Understand the technical aspects of digital assets.
This kind of trust has become even more important after the bankruptcy of FTX. Last year, the US authorities accused the crypto exchange FTX founded by SBF of misappropriating customer and company funds, and he faced multiple criminal charges. The U.S. Securities and Exchange Commission also mentioned in its June 5 lawsuit against Binance that Binance was also suspected of misappropriating customer funds.
Regarding the issue of misappropriation of funds, Coinbase stated that it will strive to maintain the complete separation of customer funds and company funds. Paul Grewal, chief legal officer of Coinbase, also earlier agreed with the legislative body to formulate relevant legal documents in the field of cryptocurrency to correctly delineate the direct boundaries between customers and companies.
BlackRock, Fidelity or other TradFi giants with large due diligence teams are unlikely to do a deal with Coinbase if they believe their clients assets are at risk, Blockinger said.
But it’s worth noting that BlackRock invested $24 million in the failed FTX. Despite the impact of Ripple’s recent favorable ruling and ETF authorized trading,People are enthusiastic about Coinbase, but there is no denying that even though Coinbase has seen many recent gains, it is still under the shadow of the SEC.
Much of Coinbases rise came from a rebound in Bitcoin prices following the ETF trade. In an analysis included in BlackRock’s ETF filings, according to data from CoinGecko,Nasdaq estimates that 56% of the $129 billion in U.S. Bitcoin trading is conducted on Coinbase,The BTC/USD++++++++ trade is the most traded pair on Coinbase.
Although public optimism for Coinbase is high after the Ripple verdict, analysts at Berenberg Capital Markets cautioned that it is too early to celebrate Coinbases victory, because the SEC charges will still have fundamental consequences for Coinbases future development. The problem.
Unlike Ripple, Coinbase is being sued for offering unregistered securities to customers through its agent wealth management service, which Coinbase has disputed. However, Berenberg analysts cautioned that this service, which allows users to earn interest from Coinbase by staking their coins, may have exceeded the scope of the Ripple ruling.
Berenberg analysts warned in a July 17 research note that if the SEC or state regulators restricted Coinbase’s normal token staking, it could severely impact its financial position through trading volume restrictions.
The Ties Frank issued a broader warning for the industry, saying that even though it has always conducted business in a trustworthy manner, the markets reliance on Coinbases multiple personalities as both a cryptocurrency custodian and an exchange is extremely unhealthy. Yes, especially after the collapse of FTX, it is healthier for the market to develop more participants than to rely heavily on any one company.
Frank mentioned that ultimately,The market needs more Coinbases. If you want institutions to be active in the cryptocurrency market, then the market requires as many institutions as possible, far from being the only one.
