The approval of bitcoin ETFs reverberated across the landscape of stocks tied to crypto, leading JPMorgan to lay out which names can emerge as winner and losers. Rule change from the Securities and Exchange Commission released Wednesday night allow for bitcoin-focused exchange-traded funds, a move many see as a catalyst for regular investors to trade the digital currency. More than 10 firms are now in the process of launching bitcoin ETFs. Though the updated policy makes it easier to hold the currency itself, some finance stocks have already allowed investors to have exposure to trends in the space. Those names include companies that offer platforms for trading the often volatile currencies or issue funds. JPMorgan looked at how some companies in the asset management sector could be impacted by the rule change. Here’s what analyst Kenneth Worthington found: Trading Coinbase is the primary brokerage and exchange for bitcoin ETFs, but Worthington said the rule change could be a double-edged sword. “We see the impact of a Bitcoin ETF as having both positive and risky elements for Coinbase,” he said. “But given the appreciation of Coinbase’s stock price, we see the risks as more relevant to shareholders.” Coinbase has been hired as the custodian for eight of 11 bitcoin ETFs approved by the SEC. It can also get a boost from fees tied to surveillance sharing agreements, Worthington noted. But he said there’s the potential for a “lose/lose” situation because a bitcoin ETF could end up being a competitor to Coinbase. That could result in customers moving to equity brokers and hurt volume. Successful crypto funds can also worsen Coinbase’s trading commissions and spreads, he said, with particular concern in simple retail trades. Robinhood has pitched itself as a lower-cost alternative to Coinbase, the analyst said. He said investors may use Robinhood’s equity brokerage for cheaper exposure to bitcoin and other currency forms should more ETFs gain regulatory approval. Elsewhere, Worthington said alternative coin trading will remain in its spot cryptocurrency division. Both stocks have pulled back in 2024 after big gains in the prior year. Coinbase has slipped about 13% so far in the new year after soaring by more than 390% in 2023. Robinhood has shed nearly 5% in 2024 following a 56.6% jump in the previous year. Analysts are mostly downbeat on the pair. Coinbase and Robinhood only have buy ratings from 30% and 25%, respectively, of analysts covering them,…
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