In the fast-paced race for spot Bitcoin exchange-traded fund (ETF) approvals, Coinbase Inc., the leading US-based cryptocurrency exchange, emerges as a significant contender, potentially poised for substantial gains. As the quest for regulatory green lights and subsequent launches unfolds in the United States, Coinbase’s stature as the country’s largest cryptocurrency trading platform places it in a privileged position, evident in the majority of filers opting for Coinbase in their Surveillance Sharing Agreements (SSA).
If spot BTC ETFs receive regulatory approval, Coinbase stands to benefit most from this development. Among the eleven contenders vying for supremacy in the spot BTC ETF race, eight have chosen Coinbase as their partner for SSA.
The Surveillance Sharing Agreement (SSA) is a contractual arrangement between crypto exchanges and regulatory bodies or market surveillance providers like the SEC. Its purpose is to bolster the integrity and transparency of the cryptocurrency market by facilitating the exchange of trading data and information. Approval of spot BTC ETF applications would mean that all firms aligning with Coinbase for their SSA would share trade data, book information, and other pertinent market data with the SEC, mitigating concerns of market manipulation.
Beyond custody services, Coinbase, once a potential complication in the ETF campaign, is now well-positioned to collaborate with issuers post-approvals, offering expertise in trading, financing, and various related services.
In the event that in-kind redemptions come into play, Coinbase could find itself in an advantageous position to finance any duration mismatch between the ETF and the spot market, given its possession of the collateral.
While Coinbase stands to gain as a custodian, it might not emerge as the primary platform for organic Bitcoin trading volume due to its relatively high fees. The advent of ETFs, however, presents an opportunity for Bitcoin ownership at reduced fees, backed by industry giants.
Coinbase has recently affirmed its readiness for spot BTC ETF approvals by reinforcing and streamlining its systems. This strategic move aims to accommodate increased trading volumes, heightened liquidity, and general demand pressures that may accompany regulatory nods.
Amidst these developments, Coinbase’s COIN shares remain on a bullish trajectory. In 2023 alone, the shares experienced an impressive 381% surge in value. On December 20, COIN stock reached a 20-month high at $168, outpacing Bitcoin’s 160% gain and Nvidia’s 236% rise, solidifying Coinbase’s position as a significant player in the evolving landscape of cryptocurrency investments.
