The spot Bitcoin Exchanged-traded Fund (ETF) race is now on, and asset managers like Fidelity and BlackRock are all aiming to be the first Wall Street company to offer the product. However, the ultimate winner will have to share that title with their surveillance-sharing partner. US-based crypto exchange Coinbase could be that partner.
The trading platform reached a surveillance-sharing agreement with BlackRock, which will allow it to share market data and user identification with its partner in an effort to curb market manipulation risks.
For this reason, the founder of asset tokenization company Sologenic, Bob Ras, says Coinbase will soon be investors’ go-to crypto exchange.
BlackRock was not the only applicant to partner with Coinbase to help get a spot Bitcoin ETF approval from the United States Securities and Exchange Commission (SEC). Other asset managers that secured a deal with the trading platform include VanEck, Invesco, Valkyrie, Fidelity, and Ark Invest’s 21Shares.
Will SEC’s Lawsuit Against Coinbase Lower Chances of ETF Approval?
These partnerships come a few weeks after the SEC brought a lawsuit against Coinbase, accusing the exchange of offering unlicensed securities and not registering the platform as a broker with the regulator.
Despite the charges, BlackRock, along with other applicants, is confident about the exchange’s way of doing business. And although the impact that the SEC’s charges have on the recent partnerships is unclear, many industry insiders are optimistic they won’t affect Coinbase’s capabilities to help roll out a spot Bitcoin ETF.
The Tie CEO Joshua Frank, whose company provides insightful data regarding digital assets, believes Coinbase has been conducting its operations in a compliant manner more than its competitors, and that’s why the asset managers chose to partner with the exchange.
Frank adds that 200 of his institutional clients are comfortable with the trading platform as a partner.
The vote of confidence from various companies has boosted the value of Coinbase’s stock COIN. On June 12, when BlackRock announced its partnership with the exchange, COIN was trading at $50. By July 13, the stock had hit $107. It is worth mentioning that the surge was also fueled by the court’s ruling that XRP is not entirely a security. Coinbase was previously accused by the SEC of offering the token as an unregistered security.
COIN, however, no longer trades at $107. As of this writing, the stock is priced at $95, according to data from Nasdaq.
Can Coinbase Attract More TradFi Players to Crypto?
The growing trust in Coinbase is important, considering that several traditional finance companies are becoming more interested in crypto. Vertel Protocol’s Chief Legal Counsel Jeffrey Blockinger claims he has talked to some CEOs of TradFi firms and have expressed their desire to invest in Bitcoin but are still looking for a centralized crypto exchange they can trust with their funds.
It’s highly likely that the collapse of FTX last November caused these CEOs to lose trust in crypto exchanges. Moreover, the World’s largest digital asset exchange Binance has also been accused by the SEC of commingling user funds recently.
Meanwhile, Coinbase says it ensures corporate and client funds are kept in separate accounts at all times. In fact, the exchange’s Chief Legal Officer, Paul Grewal, recently endorsed policies that would see this boundary formalized.
Blockinger claims that there is no way TradFi giants like Fidelity and BlackRock would partner with Coinbase without doing their due diligence to avoid putting their customers’ assets at risk.
Coinbase is currently the biggest crypto exchange by trading volume in the United States. When asset management companies started filing for spot Bitcoin ETFs in mid-June, BTC witnessed massive trading activity in the US, with 57% of the $130 billion worth of trading volume processed by Coinbase, according to data from CoinGecko.
But Frank has warned that even though Coinbase is a reputable exchange, too much reliance on a single trading platform can be unhealthy. He pointed to the crypto meltdown that occurred when FTX collapsed.
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