Coinbase Institutional execs say 'crypto can go mainstream' with spot bitcoin ETFs now live

The arrival of spot bitcoin ETFs in the U.S. has opened the door for crypto to reach a wider audience, according to two Coinbase Institutional executives.

"I think the most interesting bit that's getting a little bit drowned out by some desire to have headlines is it's the first time crypto can go mainstream," Head of Coinbase Institutional Brett Tejpaul told The Block in an interview, alongside Coinbase Head of Institutional Product Greg Tusar.

"And in all the years that Greg and I have been here trying to build the institutional business, this is like the very moment we've been waiting for. So, for us, it's the next chapter of this asset class," Tejpaul added.

Bringing in traditional asset managers

Earlier this month, 11 spot bitcoin ETFs were approved and have since seen $20 billion in trading volume . Eight products are using Coinbase as a custodian, while traditional finance companies like JPMorgan, Jane Street, Cantor Fitzgerald and Macquarie Capital have been named as authorized participants.

"What's awesome about it is if you look at the quality of the names, both on the crypto first side, ranging through to more traditional names, you have this mix of asset managers, all of whom are saying they all have, quite significant client demand," said Tejpaul. 

Tejpaul noted that the ETF approvals have reawakened interest in discussions, and everyone's asking the same question: "Are the other guys thinking about deploying more capital?"

Focusing on a smooth launch

Excluding Grayscale, the ETFs have grown to $4.4 billion in assets under management after seven days of trading. Including Grayscale, the products combined have seen a net outflow of $87 million. While this has come below some expectations, the Coinbase executives said the focus among all issuers was on ensuring a smooth launch above all else.

Tusar said Coinbase had spent a lot of time preparing for one set of operational procedures around an in-kind model, which then had to be pivoted toward the cash creation and redemption model — something the SEC requested in the final weeks , The Block previously reported. "Despite all of that, I feel like, operationally, this all came off on the first day without a hitch," said Tusar.

Tejpaul concurred. “You can't underestimate the amount of effort and time that both Coinbase and all the clients were putting into the days and weeks leading up to the launch to make sure that everything went smoothly on both sides, to actually not just Coinbase ourselves, but also everyone working in concert with one another, including, market makers, service providers, etc," he said.

"I think everyone was wanting to de-risk the launch and make sure things were smooth, and then begin to progressively scale from there," he said.

Tusar added that he expects these products to gather a lot of assets but that it won’t happen overnight. Instead it might take months and even years.