BlackRock, the global asset management firm, has submitted an update for its Bitcoin ETF (IBIT) in response to apprehensions regarding Coinbase’s custodial methods.
Investors have expressed concerns regarding the transparency of Coinbase’s management of Bitcoin, leading to requests for on-chain verification that all ETF-related transactions are accurately resolved.
BlackRock demanded that Bitcoin withdrawals from Coinbase be executed within 12 hours, citing apprehensions around the utilization of “paper BTC” or Bitcoin IOUs. Coinbase CEO Brian Armstrong informed investors that all ETF-related transactions are executed on-chain within one business day.
Notwithstanding substantial inflows into Bitcoin ETFs, Bitcoin’s price has stayed unchanged, prompting speculation that Coinbase may be conducting ETF-related Bitcoin transactions off-chain, so influencing the price. Nonetheless, Armstrong and other industry leaders have emphasized that all transactions are conducted transparently on-chain.
BlackRock’s plan to amend its ETF framework seeks to improve liquidity and increase operational transparency. Coinbase’s pivotal position in offering custody services for the majority of Bitcoin and Ethereum ETFs has elicited apprehensions regarding its dominance and possible security vulnerabilities.
Notwithstanding these issues, Coinbase continues to be a significant participant in institutional Bitcoin investing, commanding a considerable share of the US spot trading market.
