Charles Schwab makes strategic play for Bitcoin ETF, analysts say

Industry analysts expect Charles Schwab may venture into offering a proprietary spot Bitcoin exchange-traded fund (ETF).

According to RIABiz and other media outlets, analysts speculate that the firm — which offers investment products and services, including brokerage and retirement accounts and manages $8.5 trillion in client assets — may launch a spot Bitcoin ETF.

Simply put…

Schwab not gonna sit around & let Fidelity control crypto narrative.

Period.

Too much $$$ at stake w/ these brokerage platforms.

— Nate Geraci (@NateGeraci) January 27, 2024

With a reputation for conservative and thoughtful product development, Schwab may well be waiting to unveil an ETF that not only undercuts the competition with lower fees but also stands the test of time in a tumultuous market—a counter to the more aggressive forays by competitors like Fidelity Investments.

Indeed, while Fidelity has rapidly gained ground in the ETF space and BlackRock is making its presence felt, Schwab has maintained a balanced stance by making all 11 existing ETFs available on its platforms, sidestepping the need to promote a proprietary product and dodging any conflicts of interest. However, this could be part of a calculated strategy.

Insiders suggest that Schwab’s deliberate pace might translate to reduced fees due to the ‘second-mover advantage,’ possibly underpricing the competition in this fee-sensitive market.

Even amidst the restructuring and layoffs, Schwab’s online messaging has maintained a cautious stance, encouraging investors to weigh the risks carefully.

This conservative approach could well be setting Schwab up not just to enter the fray but to redefine it entirely, offering investors a potent mix of financial savvy and cost-effectiveness that could, as Eric Balchunas, a senior ETF analyst at Bloomberg, hinted, “shock the world.”

In a recent post on X, crypto expert Nate Geraci expressed his belief that a forthcoming offering from Schwab is imminent. He confidently stated, “It’s a foregone conclusion,” indicating strong certainty about the timeline.

“They may shock the world & offer something that’s 10bps in a few months.” –@EricBalchunas

Schwab to enter spot bitcoin ETF race?

I say it’s already foregone conclusion. Agree w/ Eric & believe will happen (sooner rather than later).

via @lisshidler https://t.co/5yr2y7gBhi pic.twitter.com/hHp6gh4FNL

— Nate Geraci (@NateGeraci) January 27, 2024

Moreover, Schwab’s non-committal response to inquiries about their plans may indicate a shrewd and disruptive strategy.

The financial giant has historically taken a cautious approach to new products, often forging a path distinct from contemporaries with ultra-competitive pricing as a critical differentiator.

As the Bitcoin market fluctuates, Schwab seemed content observing from the sidelines. But as Balchunas suggests, it may be a matter of time before the firm makes a potentially industry-altering move.

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