Are Charles Schwab spot crypto ETFs coming?

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The conditions Charles Schwab is waiting for before jumping headfirst into crypto could take shape soon, potentially bringing another big fish into the mix in a more substantial way.

The company currently allows investors to trade spot bitcoin and ether ETFs on its platform, as well as crypto futures contracts and options on certain BTC funds. 

“We also would like to directly offer crypto and Schwabize the crypto market, which is to take a lot of the spread and the commissions out of the crypto area to create a better deal for clients,” incoming Schwab CEO Rick Wurster said in a recent interview with Yahoo Finance.

He added: “We’ve been waiting on a change in the regulatory environment in order to do that and we’re confident…that will come in short order.” 

A Schwab spokesperson essentially echoed his sentiment to me in a Tuesday email, noting Schwab “plans to offer spot crypto trading” once the expected regulatory shifts occur.

“We understand many of Schwab’s clients are interested and engaged in cryptocurrencies, particularly with certain segments of the market, and we are monitoring this space and the regulatory environment closely,” the rep explained.

Charles Schwab’s asset management division launched an ETF that holds crypto-related stocks in 2022. But they were notably absent when a bevy of issuers (including mega competitors like BlackRock, Fidelity and Franklin Templeton) brought to market US spot BTC funds in January.

A Schwab spokesperson told me that month the firm “continues to learn and hear from investors as to their investment needs and considerations for investing in bitcoin ETFs.”

And it seems it has learned something. After all, the US BTC fund category’s net inflows surpassed $30 billion last week (in less than 11 months on the market). 

Neena Mishra, director of ETF research for Zacks Investment Research, said she expects Schwab’s pending deeper dive into the crypto space to be in the form of spot bitcoin and ether ETFs.

“The space is already crowded, and the iShares product has surged ahead,” she told me. “It won’t be easy for a new product, even with a powerful brand name, to compete with the leading products in the market.”

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