Executives at Coinbase used a latest firm ‘AMA’ name to handle rising scrutiny round Bitcoin exchange-traded funds, defending the agency’s dominant position as a custodian and pushing again in opposition to claims that spot Bitcoin ETFs are backed by “paper Bitcoin” relatively than actual belongings.
Responding to a query from Bloomberg’s James Seyffart, Coinbase CEO Brian Armstrong mentioned the corporate holds a commanding share of the U.S.-listed Bitcoin ETF custody market, estimating Coinbase’s share at greater than 80%. He framed that focus as a aggressive benefit relatively than a danger.
“We do have fairly dominant market share when it comes to custody for the ETFs. I see that as a power. We’re the trusted counterparty on the institutional aspect. I feel we’re far forward there, and it’s an ideal enterprise for us,” Armstrong mentioned on the decision.
He acknowledged issues about focus danger however famous that massive ETFs usually diversify custodians as belongings scale, which has allowed rivals to achieve restricted market share over time.
Armstrong mentioned Coinbase stays the dominant custodian for U.S. bitcoin ETFs, with roughly “80% plus market share,” whereas noting that bigger funds usually diversify custodians as they scale, a shift he known as “wholesome and good.”
Armstrong touched on the safety of Coinbase’s custody infrastructure, pointing to chilly storage programs which can be frequently penetration examined and audited.
He mentioned Coinbase has secured patents associated to its custody know-how and employs cryptographers to harden defenses in opposition to assaults. Giant monetary establishments and authorities shoppers additionally conduct their very own audits, he added.
When Seyffart requested about sentiment circulating on social media that Bitcoin ETFs usually are not totally backed by actual Bitcoin. Armstrong mentioned he doesn’t perceive the place these issues originate, reiterating that spot Bitcoin ETFs are required to be totally backed by the underlying asset.
Coinbase CFO Alesia Haas supplied extra element, explaining that critics are sometimes calling for public “proof of reserves,” equivalent to disclosure of on-chain pockets addresses tied to ETF holdings. Haas mentioned Coinbase doesn’t disclose consumer pockets addresses for safety and confidentiality causes, however pressured that ETF issuers and custody shoppers can independently confirm their belongings on-chain.
Haas mentioned the custody enterprise is ‘individually audited,’ noting that Coinbase produces SOC 1 and SOC 2 studies that show controls are in place and working successfully.
These audits reconcile holdings again to the blockchain and ensure that belongings are segregated by shoppers, together with ETF issuers.
Haas mentioned each custody consumer can see its belongings on-chain and is aware of the addresses related to its holdings. “We might by no means disclose addresses that we maintain on behalf of shoppers,” she mentioned, including that Coinbase might discover instruments that enable shoppers to reveal proof of reserves themselves in the event that they select.
Coinbase executives contact on the Readability Act
Afterward within the name, Armstrong and Haas addressed regulatory developments round Coinbase’s stance on proposed U.S. crypto market construction laws sometimes called the CLARITY Act.
Armstrong pushed again on claims that Coinbase withdrew help for the invoice, saying the corporate objected to the precise draft that it considered as unworkable.
Coinbase has spent greater than $100 million over a number of years advocating for regulatory readability, Armstrong mentioned, arguing that earlier drafts made concessions to conventional monetary commerce teams that would stifle crypto innovation.
He mentioned negotiations are ongoing and that lawmakers, regulators, and business individuals stay engaged.
Armstrong mentioned the corporate expects a market construction invoice to go and argued that statutory readability would offer long-term certainty past shifting management at companies just like the SEC. If laws stalls, he mentioned Coinbase would proceed working underneath present guidelines whereas in search of readability by way of regulators or the courts.
“I feel the invoice will get executed,” Armstrong mentioned. “It’s in everybody’s curiosity at this level.”
