ETFs
How Coinbase Would Benefit from US Ether ETFs If Approved, According to JMP
Coinbase is poised to benefit from U.S. spot exchange-traded funds, if approved, according to JMP Securities. Expectations for the potential approval of exchange-traded funds that track spot ether rose this week, a reversal of the widely held consensus that the U.S. Securities and Exchange Commission was unlikely to approve them due to the agency’s lack of commitment to deposits. The turnaround sent ether up more than 20% to start the week. ETH.CM= 5D Mountain Ether 5-day chart JMP’s Devin Ryan said in a note on Wednesday that Coinbase could see benefits to its trading, custody and staking businesses following the introduction of ether ETFs. “For Coinbase…we believe that with the approval of an Ethereum spot ETF, the end effect is that more capital will flow into the industry as a whole, and therefore we do not view this as a cannibalism from the existing business model,” Ryan said in the report. note. “This effectively eliminates barriers that previously existed for certain pools of capital.” “Perhaps even more so, we expect demand around the use of the underlying ETH to accelerate as more capital flows into the network and more developments occur, which could lead to an even greater acceleration in volume and demand in the spot market relative to ETF demand,” Ryan added. He pointed out that Coinbase’s own blockchain, Base, runs on the Ethereum network. He also said that the approval of an ether ETF does not necessarily signal a blessing from the SEC for the broader crypto asset class, or even comfort in all ETH use cases , such as staking. Nonetheless, an approval could still set a precedent that “in the eyes of many participants serves to reduce the risks associated with their involvement” in crypto. JMP has an Outperform rating on Coinbase and a price target of $320, implying an upside of nearly 42% from Tuesday’s close. Shares are up more than 33% year to date. COIN YTD Mountain COIN since the beginning of the year Final decisions on the applications of VanEck and Ark Invest are expected on Thursday and Friday, respectively. BlackRock, Fidelity, Invesco, Grayscale and Bitwise Asset Management also have applications awaiting decisions this year.