As a seasoned crypto investor with over a decade of experience navigating the volatile digital asset market, I find myself both intrigued and cautiously optimistic about BlackRock’s recent move to amend its Bitcoin ETF application. The demand for such products has been growing exponentially, driven by institutional investors seeking exposure to this burgeoning asset class.
In response to increasing investor worries regarding the on-chain settlement procedures of Coinbase, BlackRock has made adjustments to its Bitcoin exchange-traded fund (ETF) proposal.
As per a document submitted to the Securities and Exchange Commission (SEC) on September 16th, BlackRock has mandated that Coinbase, the ETF’s custodian, must handle Bitcoin withdrawal requests within 12 hours after receiving instructions from them.
As a researcher, I’ve been tasked with providing on-chain validation for Bitcoin purchases linked to spot ETFs on behalf of Coinbase, given our role as custodian for ten out of the top eleven Bitcoin ETFs and eight out of nine newly approved Ethereum (ETH) ETFs in the U.S. This comes at a time when significant institutional investment has flowed into Bitcoin through these ETFs, yet the price of BTC has shown little movement over the past three months.
There’s worry that Coinbase might obtain “promissory notes for Bitcoin,” or Bitcoin promises, which could potentially lower the real value of Bitcoin. These apprehensions have grown due to Bitcoin’s price remaining stable over the past few months, even with increased institutional investments through these ETFs.
In simple terms, Brian Armstrong, the head of Coinbase, confirmed that every transaction involving Exchange Traded Funds (ETFs) is processed directly on the blockchain, despite the fact that Coinbase doesn’t openly share all ETF account details.
On September 14th, Armstrong posted on X that Coinbase undergoes an annual audit by Deloitte, highlighting its position as a publicly-traded company. He further stated, “I find it unlikely that our institutional clients would appreciate their addresses being scrutinized, and it’s not our role to disclose such information on their behalf. This scenario illustrates how large amounts of institutional money might enter Bitcoin.
Investor fears began to escalate in August when Coinbase initially teased the creation of a new Wrapped Bitcoin (WBTC), named Coinbase BTC (cbBTC).
Despite the fears surrounding Coinbase’s practices, ETF analyst Eric Balchunas from Bloomberg argued that the ETFs themselves are not to blame for Bitcoin’s recent price slump.
Over the past few months, Bitcoin Exchange-Traded Funds (ETFs) have accumulated substantial on-chain investments, with a combined total value exceeding $59 billion as per Dune Analytics’ statistics. Among these, BlackRock’s IBIT holds the largest portion, managing over $22.5 billion in assets, accounting for approximately 38% of the market share.
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2024-09-23 18:12