By Greg Tusar and Brett Tejpaul
Compiled by: TechFlow
This article was updated on July 22, 2024, regarding the approval of nine spot Ethereum (ETH) ETFs by the U.S. Securities and Exchange Commission (SEC).
Brief description: Spot cryptocurrency ETFs are now available in the U.S., proving once again that the future of digital currency is already here. The SEC approved 9 spot ETH ETFs in July, another important milestone in the development of the crypto economy. As demonstrated by the launch and success of the spot Bitcoin ETF, spot cryptocurrency ETFs will continue to attract a diverse group of new investors, driving long-term growth and product innovation. At Coinbase, we are focused on building the most trusted crypto products to meet moments like this, expand access to cryptocurrencies, and help drive a newer financial system.
Today, the SEC approved nine spot ETH ETF applications.
Following the approval of the Bitcoin ETF in January this year, the approval of the spot ETH ETF marks another important milestone for cryptocurrency, reflecting the continued innovation and increasingly mature regulatory environment surrounding crypto assets.
Overall, ETFs provide investors with a way to access spot cryptocurrencies through a familiar, regulated product. In a short period of time, spot Bitcoin ETFs have shown their importance and ushered in a new wave of cryptocurrency adoption. To date, spot Bitcoin ETFs have attracted $17 billion in net inflows, making them the fastest growing ETFs in history.
For investors, the spot ETH ETF provides a unique crypto asset investment opportunity with unique return characteristics. The Ethereum ecosystem is very strong, with more than 15 million monthly active addresses and is expanding rapidly, with smart contract deployment growing by 300% in 2023. By increasing the use of Ethereum, spot ETH ETF investors will help increase the utility of Ether and drive the development of the overall crypto ecosystem.
Coinbase is proud to be the trusted partner and custodian for 10 spot Bitcoin ETFs and 8 of the 9 newly approved ETH ETFs. With over 12 years of experience in custody of digital assets at scale, we have developed leading institutional-grade custody solutions and will continue our company-wide approach to being the safest, simplest, and most trusted bridge to the crypto economy.
The following is the original text from January 10, 2024:
Today, the SEC approved 11 spot Bitcoin ETF applications from traditional and crypto-foreign financial providers. Approval of spot Ethereum ETF applications may soon follow. These ETFs will not only provide investors with access to spot cryptocurrencies through familiar, regulated products, but will also usher in a new wave of cryptocurrency adoption driven by the world's largest asset managers.
Before the approval news was announced, enthusiasm for spot Bitcoin ETFs had been building among both institutional and retail investors. Even before today's news, the status of cryptocurrency as an asset class was undeniable. More than 5% of the world's population, about 425 million people, own cryptocurrency. In the United States, 52 million Americans own cryptocurrency. Today's approval is the latest step in the global shift toward digital assets, which is helping to drive renewal of the financial system itself.
Cryptocurrencies are here to stay, and a spot Bitcoin ETF will further expand cryptocurrency adoption.
Introducing a diverse investor group
Total U.S. household wealth exceeds $154 trillion, of which more than a third (about $58 trillion) is managed by financial advisors, banks, and brokers. However, despite demand for cryptocurrencies from investors (including financial advisors), until today, most funds have no direct access to spot cryptocurrencies.
According to the Digital Asset 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 ETFs.
Earn the trust of the world's largest asset managers
In the 15 years of Bitcoin development, traditional financial institutions have gradually accepted crypto innovations from blockchain technology to tokenization. Spot ETFs are the biggest endorsement of cryptocurrencies by large asset management companies.
The 11 institutions approved to offer spot bitcoin ETFs manage more than $16 trillion in assets. They believe that cryptocurrencies can benefit clients in a variety of ways, such as providing a safe haven during turmoil in traditional financial markets, diversifying portfolios, and countering the impact of expansionary fiscal and monetary policies.
By providing investors with a convenient and familiar way to invest in spot cryptocurrencies, ETFs will make cryptocurrencies accessible to millions of new investors and further solidify their 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 cryptocurrency market. The ETF market does not operate independently. Every time a spot ETF is bought or sold, market makers need to trade the underlying asset, which means that a spot Bitcoin ETF will increase trading and liquidity of Bitcoin itself. As liquidity increases, investor interest will also increase, resulting in more liquidity. It's a virtuous cycle.
The popularity of ETFs in client portfolios is expected to inspire the creation of innovative financial products, such as loans and derivatives, which can use regulated ETFs as a basis.
Validating our strategy
In crypto, we often talk about “gradually, then suddenly” moments. Coinbase focuses on “gradually” — because we know “suddenly” will come. For over 12 years, we have been gradually building the most trusted, easiest-to-use products in crypto. “Suddenly,” we became the custodian of choice for many approved spot Bitcoin ETFs. We are proud to be selected by the world’s leading traditional and crypto financial institutions to support the development of their spot Bitcoin ETFs.
In a world accustomed to rapid developments in cryptocurrencies, we need to remember that some efforts take time to bear fruit. Good things take time. The Spot Bitcoin ETF is the result of years of hard work by all parties in the industry to leverage new technologies and infrastructure. The impact on the market and financial system will take time to be seen. But we firmly believe that in a few years, January 10, 2024 will be seen as a key moment in the history of Coinbase and a major step forward for the crypto economy.
We are excited about this next phase of growth and are actively preparing for it. Cryptocurrency and Coinbase are just getting started.
