Institutional Investors to Launch Services Dedicated to Cryptocurrencies
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The rejections by the US Securities and Exchange Commission (SEC) for the Bitcoin-based ETFs exchange traded funds is no deterrent to aspiring firms hopeful of launching the long-awaited cryptocurrency product.
Leading cryptocurrency exchange operator Coinbase has emerged as the latest contender in the race to launch a cryptocurrency ETF, and is considering an opportunity to partner with one of the largest asset managers of the world, BlackRock Inc. (NYSE:BLK), according to reports
It is being reported that the proposed crypto ETF is another attempt for diversification by Coinbase in its products and offerings, as the exchange continues to add new flavors to its already diversified business which currently spans across asset management, venture capital, trading, custody, and brokerage.
The crypto exchange has had discussions with BlackRock’s blockchain working group and expects to benefit from the latter’s expertise in launching exchange-traded products. in 2015, BlackRock’s blockchain working group was set up “to identify applications of blockchain-related technologies in financial services.”
An increasing number of institutional investment firms like Goldman Sachs, Citigroup, Fidelity, JP Morgan, and NYSE-parent ICE have announced plans to launch a variety of services around cryptocurrency trading.
They range from offering custodian solutions to digital asset-based crypto holdings to crypto trading platforms. An ETF seems to be the natural asset to be added to the list in the evolving cypto ecosystem.
However, SEC has kept all Bitcoin ETF proponents on hold. It has been regularly rejecting the numerous applications for Bitcoin ETF citing possibilities of fraud and need for investor protection.
With the initiative, Coinbase joins the league of multiple other crypto firms, like the Winklevoss twins-led Gemini exchange, Bitwise Asset Management, and VanEck, who are awaiting SEC nod for their respective ETF.
Earlier in March, Coinbase announced plans for an index fund based on cryptocurrencies, and the product named Coinbase Index Fund was launched in June. While the index fund is aimed at accredited investors and allows investments in the range of $250-K to $20-M, the proposed ETF is geared toward the mainstream retail investors who may be allowed investments in lower amounts.
So, if the ETF happens, it will possibly be based on a basket of cryptocurrencies instead of being the 1 based on just 1 crypto currency.