Coinbase IPO can be a game changer, with big impacts on the ETF market: BNY Mellon

Ben Slavin, BNY Mellon Global Head of ETFs, joined Yahoo Finance to discuss the Coinbase IPO and what that could mean for ETFs.

Video Transcript

- We want to continue this conversation ongoing with Coinbase and talk about what it means for the broader crypto market, and specifically for ETFs. And for that, we want to bring in Ben Slavin. He's a global head of ETFs and asset servicing at the BNY Mellon. And Ben, great to have you. Jared was just pointing out the volatility that we're already seeing on day one. I'm curious just to get your perspective of the wild action that we've seen so far in its first day of trading.

BEN SLAVIN: Well clearly, Coinbase could be a game changer, and certainly that has direct implications on the ETF market. I mean really, the space is evolving rapidly, and I think, you know, a lot of that is truly translating or will translate to how ETFs can factor into digital assets, specifically around Bitcoin. Certainly you know, this IPO really is a watershed moment in terms of really making the platform for digital assets and bringing it into the institutional space.

- So help us understand the role that you're going to be playing with that ETF, though, because you know, some of the the basket that's going to be contained within the ETF might be traded at Coinbase. I'm sure will be traded on other exchanges as this whole enterprise becomes larger.

BEN SLAVIN: Well, you know, clearly the demand for a Bitcoin ETF continues to grow. And ETFs have taken a lead role in democratizing several different asset classes. I think back to gold, as an example, you know, way back in 2004 when it was wrapped into an ETF and set the record for the first day of trading. I think a Bitcoin ETF certainly could surpass that record that we saw all the way back in 2004 whenever it comes to market.

But certainly, you know, ETFs right now, you know, are on the sidelines pending SEC approval. But we certainly see other countries look to be more friendly to crypto exchange traded products, most notably our neighbors to the north in Canada who approved these products and have taken off really with incredible amount of success, with the first product being launched raising over a billion to date, only in a few weeks of trading, and has been functioning quite smoothly in the market to date.

- So Ben, is this approval that you're expecting in the short term here in the US?

BEN SLAVIN: Well, it's hard to speculate. I think, you know, especially given today's announcement or confirmation with Chairman Gensler, I think the anticipation or the speculation continues to build. You know, I think certainly given some of the public statements and certainly Chairman Gensler's background in block chains, specifically, there's certainly the potential for the time frame for a Bitcoin ETF to move up. So what you've seen in the marketplace is now nine different filers have publicly filed with the SEC to launch what would be the first Bitcoin ETF in addition to the announcement by Grayscale with their intent to convert an ETF. You know, convert GBTC into an ETF, and I think there'll be more to follow again with that anticipation at the SEC will approve a product like this.

- Ben, from an investor standpoint, though, I mean, how do you justify or how do you explain, I guess maybe that's a better way to say it, this volatility here and how do you make investors more comfortable with it, because I think that's one thing that either investors, they're fine with the risk, but it might be spooking some people out there.

BEN SLAVIN: Yeah, absolutely. But I do think, you know, back to the concept of having this inside an ETF wrapper, I actually think gives investors some additional degree of comfort, or at least some familiarity, where certainly you could open up an account and trade, you know, on your phone and invest directly in Bitcoin or other digital currencies. But certainly the ETF has a different element to it, right? So it brings it you into the world of your brokerage account, right, in a familiar type of way to trade securities. But also opens up the possibility to an expanded pool of investors, right? Institutional investors who can't necessarily access crypto directly, or retail investors who might want to hold this asset inside their retirement account, or financial advisors who want to look at all of their assets across their book in one place. So, you know, there's definitely several different use cases, and I think the familiarity certainly plays into that, as well.

- So at what point do you think your product might get the green light?

BEN SLAVIN: Well, you know, from our standpoint, it's really hard to say. Again, we provide services to an infrastructure to the industry, so we are really supporting our clients here again, to provide all of the services and the platform necessary to launch an ETF just as we did with the Canadian products. So time will tell here and what happens in the US. But honestly, from a marketing standpoint, most of these products really operate very similar to, and in many ways exactly the same as all the ETFs operate today, whenever it does become approved. So the closest products really, to think about, that many investors are familiar with are really those precious metals ETFs, such as GLD, SLV, IAU, et cetera, because the platform and the requirements there are very, very similar, and again, speaks to, you know, how bringing Bitcoin and other digital assets into the ETF wrapper really will be familiar to most investors when it actually gets there here in the US.

- Ben Slavin, a global head of ETFs at BNY Mellon. Thanks so much for taking the time to join us today.