Coinbase, the largest crypto exchange in the United States, is confident that a U.S. bitcoin exchange-traded fund (ETF) will be approved by the U.S. Securities and Exchange Commission (SEC). Paul Grewal, Coinbase’s chief legal officer, expressed optimism about the approval during an interview with CNBC.
Grewal highlighted the recent court ruling that the SEC had no basis to deny Grayscale’s bid to convert its GBTC bitcoin fund into an ETF. The SEC declined to appeal the ruling, indicating a potential opening for the approval of a bitcoin-related ETF in the near future.
“I’m quite hopeful that these [ETF] applications will be granted, if only because they should be granted under the law,” Grewal stated. He further noted that the firms proposing these ETFs are reputable players in the financial services industry, suggesting progress will be made soon.
While Grewal did not provide a specific timeline for the approval, he acknowledged that the final decision lies with the SEC.
If a bitcoin ETF is approved, it would provide investors with a way to gain exposure to bitcoin without directly purchasing the digital asset from an exchange. This could be particularly appealing to retail investors seeking crypto exposure without owning the underlying asset.
Coinbase stands to benefit from the approval of a bitcoin ETF due to its position as the largest crypto exchange in the United States. The company’s common stock is held in portfolios designed to offer exposure to crypto.
It’s worth noting that Grayscale’s bid to convert GBTC into an ETF is not without challenges. The parent company, Digital Currency Group, along with Gemini and Genesis, faced allegations of defrauding investors of over $1 billion in a lawsuit filed by the New York Attorney General.
Despite these challenges, Grewal remains positive about the potential approval of other bitcoin ETFs, emphasizing the SEC’s obligation to apply the law neutrally to pending applications.
Bitcoin has experienced a resurgence in 2023, rising about 72% year-to-date after significant declines in 2022. The market has responded to the anticipation of the Federal Reserve’s potential interest rate changes and the upcoming bitcoin “halving” event that will reduce rewards to miners and restrict the coin’s supply.
Although trading volumes have declined recently, Grewal believes that the industry is moving toward holding bad actors accountable through criminal trials and aggressive regulatory actions. He expressed excitement about upcoming developments that could reignite investor and consumer interest in the crypto market.