Anthony Harvey / Stringer
Coinbase CEO Brian Armstrong
- Coinbase is looking to create an exchange-traded product tied to crypto, according to people familiar with the matter, as a way to allow retail investors to gain access to the volatile market.
- The firm in recent weeks has held conversations with members of BlackRock's blockchain working group to tap into the firm's expertise at launching exchange-traded products.
- Coinbase announced in March an index fund of cryptocurrencies aimed at accredited investors. An ETF, however, is geared towards more mainstream investors.
- If Coinbase were to develop a crypto ETF, it would join a number of other firms also looking to launch their own, including rival Gemini, Bitwise Asset Management, and VanEck.
Coinbase, the cryptocurrency exchange operator, is looking into getting a crypto ETF off the ground, and it has sought help from $6 trillion asset manager BlackRock.
Coinbase is known for its wide-ranging business model, covering asset-management, venture capital, trading, custody, and brokerage. It's now looking to create an exchange-traded product tied to crypto, according to people familiar with the matter, as a way to allow retail investors to gain access to the volatile crypto markets.
Coinbase in recent weeks has held conversations with individuals from BlackRock's blockchain working group to tap into the firm's expertise at launching exchange-traded products, the people said. BlackRock, an early pioneer of the ETF market, is well-known for its iShares division.
BlackRock's blockchain working group, which was started in 2015, consists of employees across its numerous businesses and its goal is to identify applications of blockchain-related technologies in financial-services, according to a person with knowledge of the group.
It remains unclear if the talks were a one-off, or part of ongoing conversations between Coinbase and BlackRock. BlackRock representatives from the working group didn't give any concrete recommendations to the crypto exchange operator, the person said.
BlackRock itself has no interest in being a crypto fund issuer, the person added. And its CEO Larry Fink has said the firm's clients have expressed zero interest in the $300 billion market for digital currencies, referring to bitcoin as an "index of money laundering."
If Coinbase were to develop a crypto ETF, it would join a number of other firms also looking to launch their own, including rival Gemini, Bitwise Asset Management, and VanEck.
Coinbase announced in March an index fund of cryptocurrencies aimed at accredited investors. The ETF would also likely track a number of cryptos, not just bitcoin, according to a person familiar with Coinbase's plans. A bitcoin ETF has been viewed as a natural next step in its maturation as an asset and could precipitate the entrance of more retail investors into the crypto market.
However, the idea of a bitcoin ETF has received push-back from regulators who don't think markets for cryptos are properly monitored. Recently, the Securities and Exchange Commission rejected a slew of nine fund proposals by a number of asset managers.
Still, Coinbase's conversations with BlackRock marks the latest example of the crypto world's growing appeal among traditional Wall Street circles.
Goldman Sachs is developing a custody product for crypto, which would mean that the bank holds cryptocurrency and, potentially, keeps track of price changes on behalf of large fund clients.
Fidelity and JPMorgan are reportedly also looking into custody. And ICE, the parent company of the New York Stock Exchange, announced in August Bakkt, a platform for cryptocurrency trading.
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