Coinbase Custody: The Preferred Custodian for Bitcoin ETFs
Many asset managers have submitted applications to launch Bitcoin spot exchange-traded funds (ETFs) in the United States this year, and Coinbase Custody is set to serve as the custodian for most of them. According to Bloomberg ETF analyst James Seyffart, Coinbase Custody is listed as a custodian in the registration forms for physically-backed Bitcoin ETFs sponsored by ARK, Bitwise, WisdomTree, Invesco, Valkyrie, Global X, and Franklin Templeton. Additionally, Grayscale, the owner of the largest Bitcoin fund, will continue using Coinbase as it transitions into an ETF. BlackRock has also chosen Coinbase Custody to manage its fund’s coins.
Coinbase: A Trustworthy Player
As the only publicly listed crypto trading platform in the US, Coinbase is subject to independent auditing and public financial reporting. This makes it a trusted choice for many firms looking to keep their assets safe. Other rival firms have faced challenges in ensuring asset safety. Binance, for example, underwent a proof of reserves audit but faced issues with its auditing partner. Tether, another major player in the crypto industry, has not received a full independent audit from a Big Four accounting agency. Circle has partnered with Coinbase for custody to address this concern.
Coinbase for Surveillance and Market Manipulation
In addition to custody services, exchanges like Cboe and Nasdaq plan to establish surveillance sharing agreements with Coinbase. This move aims to secure approval for listing multiple ETFs on their exchanges. Regulators are cautious about launching spot crypto ETFs due to concerns about surveillance and market manipulation. Last week, Binance was fined by the US government and cleared of prior CFTC charges related to market manipulation and mishandling client assets. Some analysts view this settlement as a positive development for spot ETF approval, considering that Binance was the largest market involved in manipulating BTC prices.
Hot Take: Coinbase’s Dominance in the Bitcoin ETF Space
Coinbase Custody’s role as the preferred custodian for numerous Bitcoin ETF applications in the US highlights its dominance in the market. With multiple asset managers choosing Coinbase to safeguard their Bitcoin holdings, the firm has established itself as a trustworthy and reliable player. While competition may arise in the future, Coinbase’s position as the only publicly listed crypto trading platform, coupled with its adherence to auditing and reporting regulations, gives it an edge. Additionally, Coinbase’s collaboration with exchanges for surveillance purposes further strengthens its position and increases the chances of spot crypto ETF approval.
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