Coinbase has reported started talks with financial giant BlackRock, one of the top investment firms in the world. The company already manages $6 trillion in investments and formed a blockchain group back in 2015.
What really interests Coinbase is BlackRock expertise in the ETF industry. As one of the pioneers in the market, BlackRock has a solid reputation with its popular iShares ETF products. Larry Fink, CEO of BlackRock, recently said that the company had no interest in entering the cryptocurrency market.
Reports say that employees of Coinbase have been in contact with BlackRock employees to ask for help on developing their own ETF. However, it is not clear whether the talks were just a one-off or an ongoing conversation. Coinbase plans to develop a low-cost ETF that would be accessible to retail investors. The problem with entering the cryptocurrency market is its extreme volatility which frightens a lot of investors. With an ETF, much of the risk is reduced and the barrier to entry is also lowered.
Bitcoin ETF Market Heating Up
Coinbase will be facing a lot of competition in the Bitcoin ETF market. Although non-existent, there are several projects in the planning stage that may soon become reality. International banks have been working to enter the cryptocurrency market for some time now. JP Morgan and Goldman Sachs are working on a financial product that allows them to hold crypto assets while giving clients an easy way to monitor price changes.
On the ETF front, Bitwise, Gemini and Van Eck all have ETF product proposals, with some of them being rejected by the US Securities and Exchange Commission (SEC). The SEC has already rejected nine ETF proposals but Bitcoin optimists are still hoping to push their product forward. This is mainly to help raise the legitimacy of Bitcoin and to allow more institutional money into the market.
Elaid Rosman, a new member of the SEC, is very positive about cryptocurrencies. Plus, developers are close to getting the magic formula of transparency and stability that the SEC is looking for. This makes the market more optimistic for Coinbase to launch a Bitcoin ETF especially if it teams up with BlackRock.