Coinbase Exudes Confidence in Imminent Approval of U.S. Bitcoin ETF Following SEC’s Setback

In a recent interview with CNBC, Coinbase, the leading cryptocurrency exchange in the United States, expressed unwavering confidence in the forthcoming approval of a U.S. spot Bitcoin Exchange-Traded Fund (ETF) following a significant legal setback faced by the U.S. Securities and Exchange Commission (SEC). Paul Grewal, Coinbase’s Chief Legal Officer, shed light on the potential ramifications of this development on cryptocurrency markets and investment trends. Coinbase’s optimism is rooted in the belief that the law favors such approvals, as Grewal noted.

“I’m quite hopeful that these [ETF] applications will be granted, if only because they should be granted under the law,” Grewal remarked during an interview with CNBC’s Arjun Kharpal.

The SEC recently suffered a notable setback in the courts when a judge ruled against the regulator, stating that it had no legitimate basis to deny Grayscale’s request to convert its substantial GBTC bitcoin fund into an ETF. Significantly, the SEC decided not to appeal this ruling by the key deadline, effectively opening the door for a Bitcoin-related ETF to receive approval in the near future.

Paul Grewal

“I think that the firms that have stepped forward with robust proposals for these products and services are among some of the biggest blue-chips in financial services,” Grewal emphasized. “So that, I think, suggests that we will see progress there in short order.”

While Grewal refrained from specifying the exact timeline for approval, he did caution that the ultimate decision lies with the SEC. However, he remained confident that the regulator would likely greenlight a Bitcoin ETF soon, underscoring the SEC’s inability to thwart Grayscale’s GBTC Bitcoin fund conversion into an ETF in the legal arena.

A Bitcoin ETF holds the potential to provide investors with a convenient way to gain exposure to Bitcoin without having to directly purchase it from a cryptocurrency exchange. This could be especially appealing to retail investors seeking Bitcoin exposure without the complexities of owning the underlying asset.

Should a U.S. Bitcoin ETF gain approval, Coinbase stands to benefit significantly. As the largest cryptocurrency exchange in the United States, Coinbase’s common stock is often included in portfolios designed to offer investors exposure to the world of cryptocurrencies.

Nonetheless, it’s worth noting that Grayscale’s efforts to convert GBTC into an ETF are not without their challenges. The parent company of the asset management firm, Digital Currency Group, alongside crypto exchange Gemini and DCG subsidiary Genesis, faced accusations in a lawsuit brought forth by the New York Attorney General. The lawsuit alleged that these entities had defrauded investors of over $1 billion.

Despite these challenges, Grewal remains optimistic about the likelihood of other Bitcoin ETFs receiving approval sooner rather than later, as long as the SEC adheres to the law and processes pending applications in a neutral manner.

In the context of Bitcoin’s performance, the cryptocurrency has seen a remarkable 72% increase in its value year-to-date, marking a stealthy comeback after substantial declines in 2022. This resurgence can be attributed to growing investor interest, driven in part by the Federal Reserve’s potential cessation of interest rate hikes and the anticipation surrounding the upcoming Bitcoin “halving” event, which will reduce rewards to Bitcoin miners, thereby limiting the coin’s supply.

Despite these positive indicators, trading volumes have dipped due to retail investors losing interest amid low volatility and the struggles faced by once-major industry players like FTX, BlockFi, and Three Arrows Capital. FTX, in particular, went bankrupt last year, following a mass exodus of investors concerned about liquidity issues. Its founder, Sam Bankman-Fried, is currently facing trial over allegations of defrauding investors in a multibillion-dollar scheme.

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