More Bad News for Spot Bitcoin ETF

It’s been a wild week for Coinbase Global Inc., which happens to be one the largest positions by weight in Cathie Wood’s flagship ARK Innovation ETF (ARKK). At the end of the first quarter, Coinbase was in the fund’s top four positions by weight at 5.47%. 

Wood has been a longtime advocate of Coinbase, despite mounting pressure from regulators. And she did sell $13.5 million worth of the company's shares on March 21. 

The largest crypto exchange in the U.S. is looking to take its business overseas after the SEC threatened to sue the company last month over issues with some of its products—as part of a wider crackdown on the digital asset industry. 

Now Coinbase is looking to take its business elsewhere. It received a regulatory license from Bermuda Monetary Authority, according to a company blog post on Wednesday, detailing its “eight-week international expansion drive.” It could be launching an offshore exchange there, according to a report from Fortune Crypto. And it’s also talking to Abu Dhabi Global Market regulator. 

On Tuesday, the company’s CEO told CNBC it’s preparing for a years-long court battle with the SEC.”  

The only winners here are international markets like the U.K., UAE or Bermuda that are aspiring to become crypto hubs that could be increasingly attracting more companies like Coinbase. The company notes that the U.K. is already one of its fastest-growing markets, making the country a logical next step for expansion. 

“In Coinbase’s view, it’s been one of the most well-behaved crypto companies, yet that hasn’t bought it any good will from the SEC,” said etf.com Senior Analyst Sumit Roy. “So the threat to move overseas reflects that frustration, but it’s also a matter of survival.” 

Roy and others see all this mounting tension cementing U.S. regulatory environment as “hostile to crypto,” making a spot bitcoin ETF more elusive than ever and unlikely to materialize in 2023.