Franklin

Bitcoin ETF

Bitcoin

Notable

<p>The cryptocurrency exchange Coinbase is currently at the heart of the Bitcoin ETF. The trading of the first Bitcoin ETFs began last week when the SEC finally approved several applications. This placed Coinbase at the center of the traded funds deployment. In addition to arousing envy in the sector, Coinbase’s dominance carries certain risks.</p> 
<h2 id="h-coinbase-is-the-top-choice-for-bitcoin-etf-custody">Coinbase is the Top Choice for Bitcoin ETF Custody</h2> 
<p>The US SEC has finally approved <a href="https://www.cointribune.com/en/bitcoin-etf-the-liberation-after-10-years-of-waiting/" target="_blank" rel="noreferrer noopener">Bitcoin ETF</a> filing applications from nearly a dozen investment firms. Heavyweights such as BlackRock and Franklin Templeton are among them. <strong>The majority of these issuers will rely on Coinbase</strong> for their ETF operations. Indeed, the crypto exchange will have to provide custody, trading, and lending services to numerous companies.</p>
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     <p lang="en" dir="ltr">Crypto exchange Coinbase is a key player in the rollout of US spot Bitcoin ETFs, and for some that's a cause for concern <a href="https://t.co/gFwc4pfA0m">https://t.co/gFwc4pfA0m</a></p>— Bloomberg Crypto (@crypto) <a href="https://twitter.com/crypto/status/1746915419523326315?ref_src=twsrc%5Etfw">January 15, 2024</a>
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<p>Bloomberg News <a href="https://www.bloomberg.com/news/articles/2024-01-15/coinbase-coin-at-center-of-bitcoin-btc-etf-machine-raises-concerns" target="_blank" rel="noreferrer noopener">has shown</a> that <strong>most Bitcoin ETF issuers have chosen Coinbase</strong> <strong>as their custodian</strong>. Notable examples include the Bitwise Bitcoin ETF, Grayscale Bitcoin Trust, Wisdom Tree Bitcoin Fund, and the iShares Bitcoin Trust. The approval of Bitcoin ETFs is the result of many years of efforts by the sector. These efforts are being hailed as a decisive event that will promote the adoption of Bitcoin, the world’s largest cryptocurrency.</p> 
<h2 id="h-the-risks-of-coinbase-s-domination">The Risks of Coinbase’s Domination</h2> 
<p>While Coinbase’s privileged position may be the envy of its competitors, others view it with concern. Indeed, some issuers believe there’s a <strong>possibility that the company may have to scale back some services that the crypto exchange provides</strong>. According to Dave Abner, there is a <strong>risk of concentration</strong> due to the large number of firms using the exchange as a crypto custodian.</p> 
<p>Alesia Haas, Chief Financial Officer of Coinbase, has tried to reassure the market. She stated that the company is working diligently to <strong>avoid conflicts of interest</strong>. Another spokesperson added that the exchange’s custody activity is not in question in the company’s dealings with the SEC. Moreover, several firms have chosen this exchange because they consider it the most advantageous. For <a href="https://www.cointribune.com/en/etf-bitcoin-bitwise-promises-to-donate-10-of-profits-to-bitcoin-development/" target="_blank" rel="noreferrer noopener">Bitwise</a>, the reason for its choice is that Coinbase is the largest and most well-established.</p>

Coinbase & Bitcoin ETFs: a risk of centralization?

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