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BlackRock addresses investors' concerns with amendment to Bitcoin ETF application

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by Giorgi Kostiuk

2 years ago

  1. BlackRock's Application Amendment
  2. Investors' Reactions and Coinbase
  3. Key Metrics and Expert Opinions


    4. BlackRock recently filed an amendment to its Bitcoin ETF application in response to growing concerns among investors regarding Coinbase's onchain settlement processes.

    BlackRock's Application Amendment

    According to a filing with the Securities and Exchange Commission (SEC) on September 16, BlackRock now requires Coinbase, the custodian for the ETF, to process Bitcoin withdrawals within 12 hours of receiving an instruction.

    Investors' Reactions and Coinbase

    Investors have asked Coinbase to produce onchain verification of Bitcoin purchases on behalf of spot ETFs. Coinbase is the custodian for 10 out of 11 top Bitcoin ETFs and eight of nine newly approved Ether (ETH) ETFs in the United States. Despite the recent institutional inflows through Bitcoin ETFs, BTC prices have remained flat for the previous three months. There are fears that Coinbase might acquire 'paper BTC,' or Bitcoin IOUs, which could artificially suppress the actual Bitcoin price. These concerns have been fueled by Bitcoin's stagnating price over the last few months, despite the influx of institutional investments through these ETFs.

    Key Metrics and Expert Opinions

    Brian Armstrong, the CEO of Coinbase, said that all ETF-related transactions are indeed settled on-chain, even though Coinbase does not publicly disclose all ETF addresses. On September 14, Armstrong also wrote in an X post that Coinbase is audited annually by Deloitte, emphasizing its status as a public company. ETF analyst Eric Balchunas from Bloomberg argued that the ETFs themselves are not to blame for Bitcoin's recent price slump. Since their introduction earlier this year, Bitcoin ETFs have amassed significant on-chain holdings, totaling over $59 billion. BlackRock's IBIT remains the largest of these ETFs, holding over $22.5 billion in assets, which accounts for more than 38% of the market share.

    I doubt our institutional clients want people dusting all their addresses, and it’s not our place to share for them. This is what it looks like if you want a bunch of institutional money to flow into Bitcoin.Brian Armstrong, CEO of Coinbase

    Despite the concerns surrounding Coinbase's practices, experts argue that Bitcoin ETFs are not the reason behind the recent price stagnation of Bitcoin. Meanwhile, ETFs continue to amass significant on-chain holdings, strengthening their market presence.

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