Crypto Community Raises Alarm Over Coinbase’s Dominance Of Bitcoin Held In Spot ETFs
17 January 2024 - 6:00AM
NEWSBTC
Coinbase, the largest cryptocurrency exchange in the United States,
is presently serving as the custodian of the majority of the Spot
Bitcoin ETFs managed by various asset management companies in the
industry. This notable concentration is raising worries in the
crypto community about significant centralization and potential
risks associated with the custodianship. Coinbase Dominate
ETFs As Major Custodian Coinbase’s significant role in the
advancement of Spot Bitcoin ETFs has become a target of scrutiny in
the crypto community. The American crypto exchange is currently the
custodian of 9 out of 11 Spot Bitcoin ETF companies, including
BlackRock, Grayscale, Ark/21 Shares, Bitwise, WisdomTree,
Invesco/Galaxy, Valkyrie, GlobalX, and Franklin Templeton.
Related Reading: American Investment Bank TD Cowen Says Ethereum
ETF Will Be Delayed Notably, only Fidelity and VanEck have opted
for alternative custodianship approaches. Fidelity is employing a
self-custody program for its Spot Bitcoin ETF, while VanEck has
selected Gemini, a crypto exchange, as the custodian for its Spot
BTC ETF. The prominent role of Coinbase as the major
custodian for Spot BTC ETFs has raised serious questions and
concerns in the crypto community. Specifically, Gabor Gurbacs,
Director of Digital Assets Strategy at VanEck, has deemed
Coinbase’s concentrated level of custodianship to be a
“double-edged sword.” Gurbacs stated that Coinbase would bear
substantial responsibility as the primary custodian for Spot
Bitcoin ETFs and would reap significant benefits from it. However,
he also hinted at potential counterparty risks associated with
concentrating assets within a single entity. Similarly, a
crypto analyst on X (formerly Twitter) highlighted the potential
for increased scrutiny from the United States Securities and
Exchange Commission (SEC) regarding Coinbase, given its prominent
position in the Spot Bitcoin ETF market. The crypto exchange is
presently in a legal battle with the SEC, and many crypto
enthusiasts believe that Coinbase’s regulatory challenges may pose
a threat to the success of Spot BTC ETFs. BTC price breaks
$43,000 | Source: BTCUSD on Tradingview.com Coinbase CFO Bullish On
Bitcoin ETFs The Chief Financial Officer of Coinbase, Alesia Haas
appeared recently in an interview on Bloomberg TV, discussing the
effects of Spot Bitcoin ETFs in the crypto market. Related
Reading: How To Buy, Sell, And Trade Tokens On The BSC Network When
asked if the momentum of Spot Bitcoin ETFs would become a
“game-changer” in the future, Haas responded confidently with a
resounding “absolutely.” The Coinbase CFO declared that the SEC’s
approval of Spot Bitcoin ETFs was an important day for crypto, as
it positions Bitcoin into a much broader investable asset class.
She also revealed that the deployment of Spot Bitcoin ETFs would
allow investors to have greater access to BTC products, extending
its reach to billions of people around the globe and increasing the
amount of inflows into ETFs. Featured image from Ripples
Nigeria, chart from Tradingview.com
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