Coinbase is exploring a bitcoin ETF, and it has sought help from $6 trillion Wall Street giant BlackRock

Coinbase CEO Brian
Armstrong
Anthony Harvey /
Stringer

•  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 volatile markets. 
• 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.
• If Coinbase were to develop a crypto ETF, it would join
  a number of other firms, 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 members of
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.

BlackRock representatives from the working group didn’t
give any concrete recommendations to the crypto exchange operator
and it remains unclear if the two companies will work together on
an ETF, the person said. 

To be sure, 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, including rival Gemini, Bitwise Asset Management,
and VanEck.

Coinbase already announced in March 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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