According to its monthly outlook report, Coinbase predicts that the approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) will pave the way for new “compliance-friendly” financial products.

The firm furthered that these ETFs could extend access to crypto assets for diverse investor classes like registered investment advisers (RIAs), retirement funds, and institutions.

“Spot bitcoin ETFs can help meet the demand coming from the investors and institutions that want access to crypto but don’t have recourse to buying and holding such assets directly.”

David Duong, Coinbase’s Head of Institutional Research, emphasized the potential of ETFs in easing restrictions for major money managers and institutions to invest in and hold Bitcoin. This increased accessibility could enhance liquidity and price discovery for all participants in the market.

Coinbase suggested that the broader impact of ETFs could inject billions into the crypto market and establish a regulated environment, appealing to investors who may not typically consider direct crypto investments. This regulatory framework could also facilitate access to crypto for investment brokers and RIAs.

“These ETFs can expand the pie by taking Bitcoin further into the mainstream, putting it within reach of millions of investors in broker-dealer, RIA and tax advantaged account structures.”

Coinbase acknowledged the current surge in interest around crypto ETFs, attributing it to diminishing safe investment options amid escalating geopolitical tensions and economic challenges.

According to the firm:

“The US Treasury bond market has been shaken up, dollars are expensive and the US banking sector remains highly vulnerable. We think this makes Bitcoin all the more attractive going into 2024 as an alternative to the traditional financial system.”

The exchange concluded that an ETF will “redefine the market structure around how crypto assets are bought, sold and/or exchanged.”