The world’s largest asset manager has filed for an amendment for its Bitcoin exchange-traded fund (ETF) following widespread investor concerns over Coinbase’s onchain settlement practices.
BlackRock has filed an amendment to require Bitcoin (
BTC
) withdrawals within 12 hours from the ETF’s custodian, Coinbase, according to a Sept. 16
filing
with the Securities and Exchange Commission (SEC).
BlackRock wrote in the filing:
BlackRock ETF amendment. Source: sec.gov
BlackRock’s new amendment follows widespread industry concerns about Coinbase’s ETF custodial practices. Increasingly, investors have been asking Coinbase to provide onchain proof of the Bitcoin bought on behalf of the spot ETFs.
Coinbase is the custodian for 10 out of 11 spot Bitcoin ETFs and eight out of the nine recently approved Ether (ETH) ETFs in the US.
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Coinbase CEO clarifies investor concerns over Coinbase’s Bitcoin ETF custody practices
Despite the newfound institutional inflows from the Bitcoin ETFs, BTC prices have been stagnating for the past three months.
This is partly what prompted widespread investor concerns that Coinbase was buying “paper BTC,” or Bitcoin IOUs, on behalf of Bitcoin ETF issuers, hence suppressing Bitcoin price.
However, all ETF transactions are ultimately settled onchain, despite not publicly sharing all ETF addresses, according to Brian Armstrong, the co-founder and CEO of Coinbase.
In response to investor concerns, Armstrong
wrote
in a Sept. 14 X post:
Source:
Brian Armstrong
Investor concerns started intensifying in August after
Coinbase first teased
the development of a new Wrapped Bitcoin (
WBTC
), called Coinbase BTC (cbBTC),
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Since their launch in January, the ETFs amassed over $59.2 billion worth of cumulative onchain holdings, according to Dune
data
.
BlackRock’s IBIT remains the largest Bitcoin ETF, with an over 38% market share and over $22.5 billion worth of onchain holdings.
Bitcoin ETF issuers. Source: Dune
Despite the increasing accusations, ETFs weren’t the reason behind Bitcoin’s recent price slump, caused by native Bitcoin holders, according to Eric Balchunas, senior ETF analyst at Bloomberg.
The analyst
wrote
in a Sept. 15 X post:
By Feb. 15, ETFs accounted for about
75% of new investment
in Bitcoin, which had surpassed the $50,000 mark.
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BlackRock Bitcoin ETF Requests 12Hour BTC Withdrawal Period from Coinbase