Coinbase is confident that a U.S. bitcoin exchange-traded fund might be approved by the U.S. Securities and Exchange Commission, the corporate’s chief legal officer, Paul Grewal, told CNBC.
“I’m quite hopeful that these [ETF] applications might be granted, if only because they must be granted under the law,” Grewal said in an interview with CNBC’s Arjun Kharpal.
The SEC was recently dealt a significant court setback when a judge ruled that the regulator had no basis to disclaim crypto-focused asset manager Grayscale’s bid to show its huge GBTC bitcoin fund into an ETF.
The SEC last week declined to appeal that ruling by a key deadline, likely paving the way in which for a bitcoin-related ETF to be approved in the approaching months.
“I believe that the firms which have progressed with robust proposals for these services and products are amongst a number of the biggest blue chips in financial services,” Grewal added.
“In order that, I believe, suggests that we are going to see progress there in brief order.”
He didn’t say when that is more likely to occur, and added the caveat that any decision would ultimately be as much as the SEC.
But, Grewal said, it’s likely now that the SEC will approve a bitcoin ETF soon, highlighting the regulator’s failure in court to dam Grayscale from converting its GBTC bitcoin fund into an ETF.
SAN ANSELMO, CALIFORNIA – JUNE 06: On this photo illustration, the Coinbase logo is displayed on a screen on June 06, 2023 in San Anselmo, California. The Securities And Exchange Commission has filed a lawsuit against cryptocurrency exchange Coinbase for allegedly violating securities laws by acting as an exchange, a broker and a clearing agency without registering with the Securities and Exchange Commission. (Photo Illustration by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images
“I believe that, after the U.S. Court of Appeals made clear that the SEC couldn’t reject these applications on an arbitrary or capricious basis, we will see the commission fulfill its responsibilities. I’m quite confident of that.”
The SEC declined to comment on Grewal’s comment when contacted by CNBC.
A bitcoin ETF would give investors a solution to own bitcoin without having to make a direct purchase from an exchange.
That could possibly be more appealing to retail investors seeking to gain exposure to bitcoin without having to really own the underlying asset.
Coinbase would likely profit from any bitcoin ETF that’s ultimately approved. The corporate, the most important crypto exchange in the US, is a typical stock held in portfolios designed to offer investors exposure to crypto.
Not all is rosy in Grayscale’s bid to show GBTC into an ETF, nonetheless.
The asset management firm’s parent company, Digital Currency Group, together with crypto exchange Gemini and DCG subsidiary Genesis, were accused in a lawsuit from Recent York’s attorney general of defrauding investors of greater than $1 billion.
Still, Grewal sounded a positive note on the prospect of additional bitcoin ETFs being approved — sooner moderately than later.
“We expect that other ETFs are going to be coming online soon enough because the SEC follows the law and is required to use the law in a neutral solution to the applications which are pending,” he said.
Bitcoin has risen about 72% within the yr so far, in a comeback by stealth for the world’s biggest digital currency after huge declines in 2022.
There’s been greater investor demand for the token in recent months, because the market reacts to prospect of the Federal Reserve ending its campaign of persistent rate of interest rises, and as anticipation builds across the upcoming bitcoin “halving” event, which is able to see rewards to bitcoin miners reduced by half, thereby limiting the coin’s supply.
Still, trading volumes have declined, as retail investors have change into bored with engaging out there in light of an absence of volatility and in response to severe wounds suffered by once-large industry players like FTX, BlockFi and Three Arrows Capital.
FTX collapsed out of business last yr after investors fled the platform en masse due to concerns over its liquidity. The corporate and its founder, Sam Bankman-Fried, are accused of defrauding investors in a multibillion-dollar scheme. Bankman-Fried is standing trial over these allegations and has pleaded not guilty.
Addressing the trial, Grewal said he was “quite encouraged and quite optimistic that a lot of the bad actors on this space are being held to account through criminal trials and thru aggressive regulatory actions.”
“We’re quite excited that there are a lot of developments we expect which are just across the corner, or underway at the same time as we speak, that can bring back investor and consumer interest in crypto,” Grewal added.
