Coinbase's CEO wants to launch a crypto index fund. There are regulatory hurdles to doing so. Coinbase beat analysts' expectations in its second quarter earnings.
Coinbase wants to create its own crypto index fund, CEO Brian Armstrong said on the firm's earnings call with investors.
In response to a question about Coinbase's product roadmap, Armstrong unveiled an idea he called “Coinbase 500”.
“I think these things are going to be really beneficial,” Armstrong said Thursday. “We want to ultimately see a way that we can start getting index funds — retail products — in the crypto space.”
He compared the potential Coinbase 500 to the market cap-weighted S&P 500, an index that tracks the stock performance of the 500 largest companies listed on stock exchanges in the US.
Coinbase is the largest US-based crypto exchange.
It handled $226 billion in crypto trading volume in the second quarter, down from $312 billion in the previous three months.
While Armstrong's comments are the first hint that Coinbase plans to launch a crypto index fund, the idea isn't new.
In 2017, asset manager Bitwise launched the Bitwise 10 Crypto Index Fund, a market cap-weighted index of the top 10 largest crypto assets.
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Control barriers
Armstrong's indicator idea comes as US politicians and regulators signal a more positive attitude toward crypto.
In May, the Securities and Exchange Commission's snap approval of spot Ethereum exchange-traded products was widely interpreted as a sign of a friendlier regulatory approach.
At the Bitcoin 2024 conference in Nashville last month, presidential candidate Donald Trump said he would fire SEC Chair Gary Gensler, to wild applause.
Gensler is widely recognized as impeding the development of bespoke US crypto regulation, preferring to apply existing securities laws to the asset class.
A source familiar with the matter said News Members of Democratic candidate Kamala Harris' team have reached out to the crypto industry for a “policy reset.”
Armstrong said there is still work to be done.
He said a “different policy environment” would be needed to get a crypto index approved.
“I don't see any way to do it in the near term,” he said. “So we're going to continue to do that over time with our policy efforts.”
Mixed income results
Coinbase beat analyst expectations in its second quarter earnings, reporting $1.4 billion in total revenue.
However, that was $200 million less than the $1.6 billion the company made in the first quarter.
Coinbase Chief Financial Officer Alesia Haas attributed the decline to a 28% drop in spot trading volume mainly due to lower crypto asset volatility.
The company's shares rose nearly 3% in after-hours trading.
Tim Craig is News' Edinburgh-based DeFi correspondent. Reach out with tips at [email protected].
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