BlackRock Coinbase Partnership
Coinbase shares experienced a significant 12% surge following the re-filing of BlackRock’s Bitcoin ETF application. This application was noteworthy as it included additional details highlighting a “surveillance-sharing agreement” between BlackRock, the world’s largest asset manager, and the leading U.S. cryptocurrency exchange, Coinbase. The re-filing, made on July 3, was necessary as previous ETF applications submitted by Nasdaq and Chicago Board Options Exchange (Cboe) on behalf of various fund managers, including BlackRock, were deemed “inadequate” by the Security and Exchange Commission (SEC).
The crux of the filing included an agreement between Nasdaq and Coinbase, finalized last month, which aims to “supplement the exchange’s market surveillance program” and offer access to spot BTC trade data. It’s anticipated that Nasdaq “expects to receive market data for orders and trades from Coinbase,” useful in monitoring the trading of the BlackRock Bitcoin ETF, pending approval.
Impact on Nasdaq and COIN Prices
The announcement of the BlackRock-Coinbase partnership sent positive ripples through the financial markets, and Coinbase’s shares (COIN) responded with a strong 12% surge on June 3. This push translated to COIN trading at $80.98 in after-hours trading on July 4, according to MarketWatch. Notably, this partnership has further fortified Coinbase’s robust performance in 2023, with the company stock registering a notable 140% increase since the start of the year. This rise surpasses the general crypto markets’ growth, which saw a 52% gain during the same period.
SEC and Crypto Industry Landscape
While the SEC has approved numerous futures-based ETFs, it has held back from approving a spot-based one physically backed by the asset, unlike CME contracts. This cautionary approach is interpreted by industry analysts as an attempt by the SEC and Wall Street to regulate the burgeoning asset class, particularly following a substantial crackdown on crypto companies in the U.S this year.
This strategic move has, however, not deterred other firms. The Cboe recently re-filed applications for several firms like Fidelity, WisdomTree, VanEck, and Invesco, all aspiring to launch spot BTC funds. Notably, all of these companies also named Coinbase as a surveillance-sharing partner, mirroring BlackRock’s strategy.
Crypto Markets and Bitcoin’s Position
Amid the buoyant response to the BlackRock-Coinbase partnership, the overall crypto market demonstrated a 1% rise on the day, with the total capitalization reaching a commendable $1.26 trillion at the time of writing. Bitcoin, the pioneer cryptocurrency, experienced a new local peak but continues to struggle against substantial resistance, currently hovering just above the $31,000 mark.
The recent developments surrounding Bitcoin ETFs and the increased association with Coinbase as a surveillance partner indicate a turning point in the broader acceptance and institutional interest in digital assets. As the SEC deliberates on these applications, the industry eagerly anticipates the potential approval of a spot Bitcoin ETF – a move, as ETF Store President Nate Geraci suggests, that “will shatter previous ETF launch records.”
