Coinbase is confident that a U.S Bitcoin The exchange-traded fund will be approved by the U.S. Securities and Exchange Commission, Paul Grewal, the company’s chief legal officer, told CNBC.
“I am very confident that this [ETF] Requests are granted, if only because they should be granted under the law,” Grewal said in an interview with CNBC’s Arjun Kharpal.
The SEC recently suffered a major setback in court when a judge ruled that the regulator had no basis to reject digital asset management Grayscale’s offer to convert its massive GBTC Bitcoin fund into an ETF.
The SEC last week declined to appeal that ruling within a key deadline, likely paving the way for approval of a Bitcoin-related ETF in the coming months.
“I believe that the firms that have provided us with solid proposals for these products and services are among the largest blue chips in financial services,” Grewal added.
“That suggests to me that we will see progress there shortly.”
He did not say when that would likely happen, adding the caveat that any decision would ultimately rest with the SEC.
But, Grewal said, it is now likely that the SEC will soon approve a Bitcoin ETF, highlighting the regulator’s failure in court to stop Grayscale from converting its GBTC Bitcoin fund into an ETF.
SAN ANSELMO, CALIFORNIA – JUNE 06: In 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 operating as an exchange, broker and clearinghouse without registering with the Securities and Exchange Commission. (Photo illustration by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images
“I think now that the US Court of Appeals has made it clear that the SEC cannot arbitrarily or capriciously reject these requests, we will see how the Commission discharges its responsibilities. I’m pretty confident about that.”
A Bitcoin ETF would give investors the opportunity to own Bitcoin without having to make a direct purchase on an exchange.
This could be more attractive to retail investors who want exposure to Bitcoin without having to actually own the underlying asset.
Coinbase would likely benefit from any Bitcoin ETF that is ultimately approved. The company, the largest crypto exchange in the United States, is a common stock held in portfolios designed to provide investors with access to crypto.
However, not everything is rosy with Grayscale’s attempt to convert GBTC into an ETF.
The asset management firm’s parent company, Digital Currency Group, as well as crypto exchange Gemini and DCG subsidiary Genesis have been accused of defrauding investors of more than $1 billion in a lawsuit filed by the New York attorney general.
Still, Grewal was positive about the prospect of more Bitcoin ETFs being approved – sooner rather than later.
“We expect other ETFs to come online soon as the SEC abides by the law and is committed to applying the law neutrally to the pending applications,” he said.
Bitcoin is up about 72% year to date, marking a quiet comeback for the world’s largest digital currency after huge declines in 2022.
There has been greater investor demand for the token in recent months as the market reacted to the prospect that the Federal Reserve would end its campaign of sustained interest rate hikes and as anticipation grew for the upcoming Bitcoin halving, which will reward Bitcoin in numbers the miner was reduced by half, limiting the supply of coins.
Still, trading volumes have declined as retail investors are no longer interested in engaging in the market amid a lack of volatility and in response to severe wounds suffered by once-major industry players such as FTX, BlockFi and Three Arrows Capital.
FTX collapsed into bankruptcy last year after investors deserted the platform en masse amid concerns about the platform’s liquidity. The company and its founder, Sam Bankman-Fried, are accused of defrauding investors in a multibillion-dollar scheme. Bankman-Fried is on trial on these charges.
Regarding the process, Grewal said he was “very encouraged and very optimistic that a number of the bad actors in this space will be held accountable through criminal prosecutions and aggressive regulatory action.”
“We are very pleased that we believe there are a number of developments that are imminent or underway that will rekindle investor and consumer interest in cryptocurrencies,” Grewal added.