Coinbase and Robinhood Face Market Volatility Following SEC Approval of Bitcoin ETFs
Shares of cryptocurrency exchanges Coinbase and Robinhood fell following the recent approval of spot Bitcoin exchange-traded funds (ETFs). According to a report by CNBCCoinbase saw its shares fall by over 6%, while Robinhood saw a decline of more than 3%.
The approval of rule changes by the Securities and Exchange Commission (SEC) allowing the launch of spot Bitcoin ETFs marked a pivotal moment for the cryptocurrency industry. This move, long awaited by investors, marked a step towards recognizing the credibility of cryptocurrencies.
Navigating the dynamic crypto market
Robinhood saw its shares fall despite a 56% rise last year. The broader implications of the SEC’s approval of spot Bitcoin ETFs led both major platforms to evaluate their strategies in response to the changing crypto landscape.
The impact is not limited to Coinbase as Robinhood struggles with the fallout from the SEC decision. Both platforms face the challenge of adapting to a new financial landscape where ETFs could change the dynamics of cryptocurrency investing. Brian Armstrong, the CEO of Coinbase, has acknowledged the significance of the SEC’s decision and emphasized its importance for the crypto industry.
As the custodian of choice for most SEC-approved spot Bitcoin ETFs, Coinbase’s role remains crucial. The potential downside, however, is that spot Bitcoin ETFs distract investors from Coinbase’s platform, creating a competitive landscape for the crypto giant.
Coinbase’s Role in Spot Bitcoin ETFs
Last July, Cboe amended its spot Bitcoin ETF listing application to include Coinbase as a Surveillance Sharing Partner (SSA). This move impacted spot Bitcoin ETFs filed by notable companies such as Fidelity, VanEck, WisdomTree, Invesco, Ark Invest, and 21Shares.
The key aspect of Cboe’s renewed approach lies in its willingness to adopt the SSAs recommended by the SEC. These agreements are designed to protect against potential fraud and market manipulation. These concerns have led regulators to reject spot Bitcoin ETFs in the past.
SSA is a regulatory requirement established by the SEC that requires a partnership between the party listing a spot Bitcoin ETF and a spot exchange . The purpose is to ensure timely exchange of information with the regulator about suspicious activities in the market. On Wednesday, the SEC approved applications from 11 companies to list spot Bitcoin ETFs. This monumental decision marked a significant shift in the cryptocurrency landscape.
The SEC approval included major players in the financial space, including ARK 21Shares, Invesco Galaxy, VanEck, WisdomTree, Fidelity, Valkyrie, BlackRock, Grayscale, Bitwise, Hashdex, and Franklin Templeton. With regulators’ approval, these issuers can now list their Bitcoin ETFs on the NYSE Arca, Nasdaq and Cboe BZX, potentially reshaping the crypto investment landscape.
