Coinbase is amongst the largest crypto exchanges. Especially in the United States, it is one of the most popular. However, their popularity increased after becoming the custodian of many spot Bitcoin ETF applications. Now the question arises: Did Coinbase get it right with regard to spotting Bitcoin ETF custodianship? Well, a post on Twitter provides a better explanation. Let’s dive in!
Coinbase Serves as The Chief Custodian Of Many Spot Bitcoin ETFs
There was a post on Twitter (now X) showing how much authority Coinbase has in the crypto industry. Apparently, this Twitter user with the username @BTCGandalf shared an image showing some of the Spot Bitcoin ETF filings custodians. This massive revelation showed that Coinbase has the majority of the shares. So, in the image, there were about 12 spot Bitcoin ETF filings. However, Coinbase had the majority of the positions as the custodian.
Going into details, the first applicant in the image was Grayscale, and their custodian was Coinbase. So, the second applicant was Ark/21 Shares, and their custodian was Coinbase, too. Blackrock and Bitwise also had Coinbase as their custodian. However, there was a little break from Coinbase as VanEck made Gemini their own custodian. Nevertheless, the list continues with WisdomTree and Invesco/Galaxy making Coinbase their custodian. Then, there was a massive change of actions. Apparently, Fidelity made their own custodian self-custody. Others, such as Valkyrie, Global X, and Franklin Templeton, also chose Coinbase. This is bringing up a lot of reactions from crypto enthusiasts.
Reactions from Crypto Enthusiasts
Under the post, many crypto enthusiasts quickly made their opinions about the current revelation known. Obviously, many of them were not happy with Coinbase taking the majority of the custodianship. Apparently, many of them were of the opinion that this would bring more centralization to crypto.
One of them said, “Not your keys, not your coins. If Coinbase ever gets hacked, those ETFs go to zero.” Another angle to their reactions was that many were commending Fidelity for self-custody. According to one of them, “Fidelity gets it. The rest are adding layers of unnecessary and risk on intermediaries because they’re too lazy or stubborn to do the work.”
Coinbase Custodianship: A Hit Or Miss?
It is obvious that many don’t like the idea of Coinbase standing as the custodian of many spot Bitcoin ETF applicants. In fact, there are good reasons people shouldn’t want a situation like that.
The first reason is centralization. Coinbase having a large percentage of custodianship leads to centralization. Apparently, this means they will be in large control of what happens around spot Bitcoin ETFs. In fact, it causes a lack of diversity in custodial options, potentially hindering healthy competition. Furthermore, it leads to stagnation in the level of innovation in spot Bitcoin ETF.
Secondly, regulatory concerns are a huge disadvantage to Coinbase taking a large chunk of custodianship. So, assuming there are changes in regulatory compliance, it could potentially lead to many issues. Moreover, this could also lead to the government having more control of the crypto industry.
Conclusion
The recent post from a crypto enthusiast about Coinbase taking a lot of Spot Bitcoin ETF custodianship was an eye-opener. Apparently, this post showed there could be a lot of risks if it should continue that way. In conclusion, it could lead to more centralization in the crypto industry. Remember that centralization isn’t among the ethos of the crypto industry. Furthermore, regulatory compliance could give the government more control of the industry.
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advice from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or receive any incentive from the company.
