ETF Store president predicts “bloodbath” of crypto exchanges after BTC ETF approval

What’s new? The approval of spot bitcoin exchange-traded funds (ETFs) in the United States, expected in early 2024, could turn into a “bloodbath” for local centralized crypto exchanges (CEXs) due to lower transaction fees, according to experts interviewed by Cointelegraph. Thus, Bloomberg analyst Eric Balchunas expects that trading in shares of spot BTC ETFs will be subject to fees of 0,01% (the average for this segment), while fees on the Coinbase exchange can reach 0,6% depending on the cryptocurrency, trading pair, and transaction volume.

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What else is known? According to ETF Store president Nate Geraci, exchanges will be forced to improve their services to compete with spot BTC ETFs, as the latter will provide retail traders with favorable conditions, including institutional-level trade execution and low fees. Such conditions will provoke a “bloodbath” in the segment of centralized crypto trading platforms, the businessman believes.

Source: Twitter.com

Historically, Coinbase has derived most of its revenue from transaction fees. In 2022, it earned $2,4 billion in fees from institutional and retail investors, accounting for 77% of its total net revenue of $3,1 billion. However, the company is working to reduce its reliance on fees by diversifying its revenue sources, including the development of subscription services.

Several investment firms are currently awaiting approval to launch spot BTC ETFs from the US Securities and Exchange Commission (SEC), including BlackRock, Fidelity, Bitwise, VanEck, and Valkyrie. The SEC has repeatedly criticized their filings for incomplete information and postponed ruling deadlines. Recently, however, analysts have been positive about the prospects for such products, as companies have been actively supplementing their filings, indicating a productive dialog with officials.

In addition, SEC Chairman Gary Gensler said that the agency is reviewing the applications taking into account the court’s decision on the lawsuit of Grayscale. The firm sued the SEC for refusing to convert its bitcoin trust into a spot exchange-traded fund. At the end of the trial, the judge overturned the denial and ordered the SEC to reconsider the application, noting that officials acted inconsistently by approving futures funds and not allowing spot funds, even though they carry the same risks.

Grayscale CEO speaks about productive talks with the SEC regarding the launch of spot crypto ETFs

The regulator has two company applications pending to convert cryptocurrency trusts into exchange-traded funds

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VanEck predicts that spot BTC ETFs will raise $2,4 billion after launching in early 2024. Bitwise experts believe that this event will trigger bitcoin’s rise to $80 000.