Key Takeaways
- BlackRock's Bitcoin ETF now requires Coinbase to process Bitcoin withdrawals within 12 hours, addressing investor concerns over custodial practices.
- Coinbase CEO Brian Armstrong reassures investors that all ETF transactions are settled onchain, despite fears of “paper BTC.”
- Concerns have been rising that Coinbase might be buying ‘paper BTC’ or Bitcoin IOUs, potentially suppressing Bitcoin prices.
BlackRock Amends Bitcoin ETF for 12-Hour Withdrawals
BlackRock has filed an amendment for its Bitcoin ETF, requiring Coinbase to process withdrawals within 12 hours, as per a filing with the SEC on September 16.
This amendment addresses growing investor concerns regarding Coinbase’s onchain settlement practices for Bitcoin ETFs.
The new requirement aims to provide more transparency by ensuring that Bitcoin withdrawals from the ETF's custodian happen promptly upon receiving instructions.
Investor Concerns Over Coinbase’s ETF Custody Practices
Concerns have been rising that Coinbase might be buying "paper BTC" or Bitcoin IOUs, potentially suppressing Bitcoin prices.
Despite these concerns, Coinbase CEO Brian Armstrong emphasized that all ETF transactions are settled onchain, even if addresses are not publicly shared.
Armstrong pointed out that Coinbase undergoes annual audits by Deloitte, offering additional transparency for its institutional clients.
Bitcoin ETFs and Market Dynamics
Bitcoin ETFs have accumulated over $59.2 billion in onchain holdings since their launch, with BlackRock's IBIT controlling the largest market share at 38%.
Eric Balchunas, a senior ETF analyst at Bloomberg, argued that native Bitcoin holders, not ETFs, are responsible for the recent BTC price slump.
According to Balchunas, ETFs have played a stabilizing role by repeatedly preventing Bitcoin’s price from falling further.
