Recent research revealed that a substantial amount of Bitcoin is under the management of Coinbase. This makes them a significant player in the industry and a potential critical point of failure in case of a hack.
Why Pick Coinbase as Your $BTC Custodian?
Crypto custodians have become an essential part of the crypto industry, but only a few can manage substantial amounts of BTC. Coinbase is one of these companies due to several reasons: * Regulatory pressure — The current US government is not very crypto-friendly. The SEC actively targets various crypto firms. * Fewer crypto-friendly banks — The government has closed many crypto-friendly banks, reducing the number of available options. * Self-custody — While a good option, it carries risks such as private key management.
$BTC Spot ETFs and ETPs
There are 17 companies offering Bitcoin ETFs and ETPs that use Coinbase as their custodian. For example, the Fidelity fund holds its assets in self-custody. These companies collectively manage 806,619 BTC.
MicroStrategy and CEXes
MicroStrategy, Tesla, and SpaceX entrust Coinbase with managing their Bitcoin. MicroStrategy holds 79,296 BTC, and together, these three companies hold 99,091 BTC. Exchanges such as Coinbase, Revolut, and Bitvavao manage 1,105,318 BTC.
Thus, Coinbase serves as the custodian for a significant amount of Bitcoin for various major companies, making it a potential point of failure in case of a hack. This underscores the importance of selecting a reliable partner for cryptocurrency custody.
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