Coinbase shares jump 14% amid market revelry over Grayscale win

Companies • August 29, 2023, 1:06PM EDT

Published 1 minute earlier on

Quick Take

Coinbase shares surged to nearly $86 after Grayscale scored a win against the SEC, bringing it one step closer to potentially launching a spot bitcoin ETF.
Coinbase has deals in place that could put it in a position to benefit if the funds are eventually approved.

Coinbase shares leapt as much as 14% on Tuesday after news broke that Grayscale Investments had won a court battle in its ongoing case against the Securities and Exchange Commission related to its bid to launch a spot bitcoin exchange-traded fund.

The company's shares soared by almost $13 a share, jumping from about $73 per share to nearly $86 at one point, according to TradingView.

Coinbase shares. Source: TradingView.

The race toward a spot bitcoin ETF

If spot bitcoin ETFs become a reality, Coinbase could be in a position see potential gains. Besides the possibility of the crypto ETFs generating a general sense of optimism across the digital currencies market, the trading platform has surveillance sharing agreements in place with exchange venues that are hoping to bring the funds to market such as Cboe and Nasdaq.

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The arrangements are part of efforts to differentiate the latest applications from ones that have failed in the past in the hopes of reducing concerns about potential market manipulation.

The SEC has yet to approve a spot fund, with a slew of applications still being reviewed. It has previously approved ETFs that are based on bitcoin futures.

With Coinbase's revenues from transaction fees and USDC stablecoin interest both declining, any new source of revenue could be a boon to the the largest cryptocurrency trading firm in the U.S. The company's shares performed well during the early part of the summer amid anticipation that spot bitcoin ETFs will eventually go live but then later lost some of their value.

While the crypto exchange has seen gains of 131% percent so far this year, it's had a rocky August, with shares down almost 12% this month.

About Author

RT Watson is a senior reporter at The Block who covers a wide array of topics including U.S.-based companies, blockchain gaming and NFTs. Formerly covered entertainment at The Wall Street Journal, where he wrote about Disney, Netflix, Warner Bros. and the creator economy while focusing primarily on technological disruption across media. Previous to that he covered corporate, economic and political news in Brazil while at Bloomberg. RT has interviewed a diverse cast of characters including CEOs, media moguls, top influencers, politicians, blue-collar workers, drug traffickers and convicted criminals. Holds a master's degree in Digital Sociology.