Bitcoin ETF

Bitcoin

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 <p class="is-style-lead">Coinbase is the custodian of eight of the 11 approved Bitcoin ETFs, and several blockchain specialists and ETF consultants have raised <a rel="noopener noreferrer nofollow" title="concerns" href="https://thebittimes.com/tag/concerns.html">concerns</a> about this high concentration on one platform.</p>
 <p>The extensive involvement of Coinbase in these ETFs extends beyond mere custodianship. The digital-asset exchange is poised to provide a comprehensive suite of services, encompassing custodial, trading, and lending functions, to prominent players like BlackRock.</p>
 <p>However, this concentration of responsibilities within a single entity, Coinbase, is sparking <a rel="noopener noreferrer nofollow" title="concerns" href="https://thebittimes.com/tag/concerns.html">concerns</a> among experts in the blockchain and ETF sectors.&nbsp;</p>
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    <p lang="en" dir="ltr">This is a horrendous level of centralization within the proposed Bitcoin ETFs. It seems Fidelity @DigitalAssets is the only one doing it right. pic.twitter.com/YhpC0DHl62</p>— Jameson Lopp (@lopp) December 3, 2023
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 <p>Notably, the SEC has expressed reservations about the risk concentration created by Coinbases’s <a rel="noopener noreferrer nofollow" title="custody" href="https://thebittimes.com/tag/custody.html">custody</a> of all major ETFs. The SEC has engaged in a legal confrontation with Coinbase, alleging that the company operates an unregistered exchange and broker-dealer, accusations that Coinbase vehemently denies.</p>
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    <p lang="en" dir="ltr">So 10 out of 11 #Bitcoin ETF’s private keys are held via Coinbase outside of Fidelity? <br><br>The self <a rel="noopener noreferrer nofollow" title="custody" href="https://thebittimes.com/tag/custody.html">custody</a> cypher punk in me clearly envisions how that is impending future security risk? Doesn’t anyone else?</p>— Dawdu (@_DAWDU) January 15, 2024
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 <p>David Schwed, the Chief Operating Officer at Halborn, a blockchain security firm, voiced concerns over this development in a recent conversation with Bloomberg. According to Schwed, the financial market infrastructure is traditionally segmented into distinct roles to avoid such responsibility concentrations. He argues that having a single entity like Coinbase handle all aspects of a trade’s lifecycle could be problematic.</p>
 <p>The reliance of ETF issuers on Coinbase’s services has been flagged as a concentration risk. Dave Abner, a principal at Dabner Capital Partners, an ETF consultancy, similarly expressed surprise to Bloomberg that issuers are not mandated to use multiple custodians to safeguard against potential risks.</p>
 <p>In response to these <a rel="noopener noreferrer nofollow" title="concerns" href="https://thebittimes.com/tag/concerns.html">concerns</a>, Coinbase Chief Financial Officer Alesia Haas has stated that the company strives to mitigate conflicts of interest, and the company’s <a rel="noopener noreferrer nofollow" title="custody" href="https://thebittimes.com/tag/custody.html">custody</a> business is not implicated in the ongoing SEC case.</p>
 <p>A critical aspect of Coinbase’s role is its exclusive partnership with BlackRock as the sole trading agent for its Bitcoin ETF, operating through Coinbase Prime. Furthermore, Coinbase’s lending service, albeit a smaller organization segment, is vital for the Bitcoin ETF mechanism. It allows issuers like BlackRock to borrow Bitcoin or cash on a short-term basis for trading.</p>
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<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/coinbase-dominance-over-bitcoin-etf-custody-raises-concerns-tbt76668.html">https://thebittimes.com/coinbase-dominance-over-bitcoin-etf-custody-raises-concerns-tbt76668.html</a></p>

Coinbase dominance over Bitcoin ETF custody raises concerns

TheBitTimes

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