- BlackRock has filed an amendment to require Bitcoin withdrawals within 12 hours from its Bitcoin ETF’s custodian, Coinbase, following investor concerns over Coinbase’s custodial practices.
- The amendment comes amid widespread concerns that Coinbase was buying paper Bitcoin or IOUs on behalf of Bitcoin ETF issuers, suppressing BTC price.
- Despite the concerns, ETFs have helped support Bitcoin’s price, according to Eric Balchunas, a senior ETF analyst at Bloomberg.
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 Files Amendment for Faster Withdrawals
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 United States Securities and Exchange Commission.
BlackRock wrote in the filing, “Subject to confirmation of the foregoing required minimum balance, Coinbase Custody shall process a withdrawal of Digital Assets from the Custodial Account to a public blockchain address within 12 hours of obtaining an Instruction from Client or Client’s Authorized Representatives.”
The 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 Responds to Investor Concerns
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.
In response to investor concerns, Brian Armstrong, co-founder and CEO of Coinbase, wrote in a Sept. 14 blog post, “If you want audits, Deloitte audits us annually (we’re a public company). 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.”
ETFs Not Behind Recent Bitcoin Price Slump
Since their launch in January, the ETFs have amassed over $592 billion worth of cumulative onchain holdings, according to Dune data.
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 blog post, “I get why these theories exist and ppl want to scapegoat the ETFs Bc it is too unthinkable that the native HODLers could be the sellers. But they are. All the ETFs and BlackRock have done is save BTC’s price from the abyss repeatedly.”
Conclusion
The new amendment from BlackRock aims to address investor concerns about transparency and proof of holdings for its Bitcoin ETF. While some have blamed ETFs for Bitcoin’s recent price drops, analysts maintain that native Bitcoin holders are behind the slump. More transparency from custodians like Coinbase could help strengthen trust in Bitcoin ETFs among investors going forward.
