Coinbase, Robinhood and the race to put stocks on the Blockchain

Compilation: Vernacular Blockchain

When Bitcoin breaks $100,000 in December 2024, it will not just be another price milestone, but the pinnacle of a larger event. In January 2024, the U.S. Securities and Exchange Commission (SEC) approved a spot Bitcoin ETF, fundamentally changing the way institutional funds flow into cryptocurrencies, and we are witnessing this result in real time.

What impresses me at this moment is that after years of regulatory resistance, the approval not only legalized Bitcoin but also created a new layer of infrastructure that traditional finance can access. The result? Bitcoin has rapidly transformed from a digital wonder into a necessity for investment portfolios, at a speed that exceeded everyone's expectations.

The transformation of infrastructure is where the real interest lies. These are not traditional investment products. Spot Bitcoin ETFs hold real Bitcoins, rather than contracts or derivatives. You can think of it as holding physical gold bars in a gold ETF, except that the "vault" here is digital, and the custodian is a company well-versed in cryptographic technology, suddenly managing billions in institutional funds.

Among the 12 spot Bitcoin ETFs currently trading, 9 rely on Coinbase for custody.

Coinbase's custody of 9/12 of the Bitcoin ETF brings both competitive advantages and concentration risks. This dominant position in infrastructure creates stable income but also raises questions about single points of failure in the crypto ecosystem.

This is not a coincidence; the market recognizes that crypto infrastructure requires crypto expertise. Traditional banks that have been talking about "blockchain solutions" for years have suddenly realized that they need companies that truly understand how to protect digital assets at an institutional scale.

This concentration has brought about interesting dynamics. Coinbase has transformed from a platform reliant on transaction fees (making a fortune in bull markets and starving in bear markets) into a key piece of financial infrastructure. ETF custody can generate predictable income regardless of market sentiment. It's like turning from a casino into a bank that handles casino funds.

Data speaks for itself. Coinbase achieved its best performance in history in 2024, and analysts expect tremendous growth in 2025. The company has transformed from following the crypto wave to becoming the infrastructure impacted by the institutional wave.

But the role of infrastructure will attract competition, and Robinhood is catching up in a different way. Coinbase focuses on institutional custody and compliance, while Robinhood targets retail investors frustrated by the complexities of crypto.

The ETF revolution has changed the revenue model of crypto platforms. Trading fees have decreased from 70% to 35%, while infrastructure services have increased from 15% to 45%, creating a more predictable business model and reducing dependence on market fluctuations.

Robinhood's recent actions reflect this strategy: launching tokenized US stocks in Europe, staking major cryptocurrencies, perpetual futures trading, and a customized blockchain for settling real-world assets. Robinhood is building an entry point for mass adoption, while Coinbase is managing the treasury.

Robinhood's commission-free cryptocurrency trading and streamlined user experience have gained market share, especially against a backdrop of reduced regulatory friction. Record trading volumes and analysts' optimistic forecasts for 2025 indicate that this retail-focused approach complements institutional infrastructure rather than competing directly.

There is also BTCS Inc., which offers a completely different set of lessons. As the first cryptocurrency company to be listed on NASDAQ in 2014, BTCS represents a pure play on the crypto business model. The company pioneered "Bividends" (paying dividends to shareholders in Bitcoin instead of cash) and operates Blockchain analytics while holding direct crypto assets.

BTCS currently holds 90 Bitcoins and is expanding to 12,500 Ethereums through strategic financing. The company demonstrates how crypto-native enterprises can adapt in institutional validation without compromising their core principles. While giants compete for dominance in infrastructure, professional players are also exploring sustainable niches.

The reason this ecosystem shift is captivating is that traditional finance has absorbed this technology, which should have been disruptive, at an astonishing speed.

The spot Bitcoin ETF addresses the institutional access issue by providing compliant investment tools. The image below shows how different types of investors can gain exposure to Bitcoin without directly holding the crypto assets.

ETFs provide institutional investors with the necessary compliance packaging, transforming cryptocurrencies from alternative assets into a part of their portfolios.

The regulatory environment indicates that this acceptance is permanent. Political leadership openly supports cryptocurrencies as a national strategic infrastructure, coupled with the ongoing evolution of the SEC, suggesting that the framework will expand rather than contract. Ethereum ETFs, multi-crypto funds, and integration with traditional wealth management are logical advancements.

Institutional behavior has confirmed this maturity. Recent documents show that during the volatility in the first quarter of 2025, some asset management companies reduced their Bitcoin ETF positions, while others allocated for the first time. This is not speculation, but portfolio management. Institutions view cryptocurrencies as an asset class that requires risk assessment and allocation decisions.

The infrastructure supporting this transformation continues to strengthen. Custodial solutions have evolved from exchange platform wallets to institutional-grade security. The trading infrastructure handles billions of transactions daily, with no more of the failures common in the early crypto market. The regulatory framework provides clarity for compliance officers who are anxious about digital assets.

The market structure reflects this evolution. Price discovery takes place on regulated trading platforms with institutional participation, rather than on fragmented crypto-only platforms. Liquidity comes from various sources, including algorithmic trading, institutional arbitrage, and retail participation through familiar brokers.

But I think the most remarkable thing is that we are witnessing the creation of parallel financial infrastructure, rather than a replacement of existing systems. Cryptocurrency has not disrupted traditional finance, but rather forced traditional finance to build systems compatible with crypto.

Coinbase has become a bridge between the Bitcoin network and institutional custody demand. Robinhood has created a crypto trading experience that feels like stock trading. ETF providers are packaging crypto exposure into familiar investment tools. Each player has addressed specific friction points rather than demanding a wholesale adoption of a new paradigm.

This infrastructure approach explains why the approval of a Bitcoin ETF has triggered such dramatic price fluctuations.

The acceleration of Bitcoin's price is directly related to the milestones of ETF infrastructure, rather than speculative bubbles. The correlation between regulatory developments, ETF trading volumes, and sustained price increases indicates that institutional demand is driving the market.

Institutional funds are not waiting for cryptocurrencies to mature, but rather for compliant access methods. Once these methods exist, allocation decisions will follow standard portfolio logic rather than speculation.

The winners of this transformation may not necessarily be the platforms with the most users or the highest trading volume. They are the companies that provide reliable infrastructure for asset classes that institutional investors can no longer ignore.

Success metrics also change accordingly. Income stability is more important than growth rate. Regulatory compliance brings a competitive advantage. Technological reliability determines institutional trust. These factors favor mature players with resources to build robust infrastructure, rather than startups that promise disruption.

Looking to the future, the infrastructure is already in place. The regulatory framework continues to evolve in a supportive manner. Institutions are adopting predictable models based on risk tolerance and allocation models. The speculative phase is coming to an end; the phase of infrastructure utilization is beginning.

The revolution is not about Bitcoin prices reaching six figures, but about the infrastructure that makes cryptocurrencies a standard component of diversified investment portfolios. Companies that build and continue to maintain this infrastructure will control the future of institutional crypto adoption.

This is where true value creation and capture happens.

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