The world’s largest asset manager has submitted an amendment for its Bitcoin exchange-traded fund (ETF) amid growing investor apprehensions regarding Coinbase’s on-chain settlement methods.
In a filing with the Securities and Exchange Commission (SEC) dated September 16, BlackRock indicated that it now requires Bitcoin (BTC) withdrawals to be processed within 12 hours by its custodian, Coinbase.
In the filing, BlackRock stated:
BlackRock ETF amendment. Source: sec.gov
This amendment comes in response to significant concerns within the industry about Coinbase’s custodial practices for ETFs. Investors are increasingly requesting that Coinbase provide on-chain verification of the Bitcoin purchased for spot ETFs.
Coinbase serves as the custodian for 10 out of 11 spot Bitcoin ETFs and eight out of nine recently approved Ether (ETH) ETFs in the United States.
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Coinbase CEO addresses investor concerns regarding Bitcoin ETF custody practices.
Despite the influx of institutional investments from Bitcoin ETFs, BTC prices have remained stagnant over the past three months. This stagnation has led to widespread investor anxiety that Coinbase might be acquiring “paper BTC,” or Bitcoin IOUs, on behalf of ETF issuers, which could be exerting downward pressure on Bitcoin prices.
However, according to Brian Armstrong, Coinbase’s co-founder and CEO, all ETF transactions are ultimately settled on-chain, even though the company does not publicly disclose all ETF addresses. Addressing these investor concerns, Armstrong stated in a post on X dated September 14:
Source: Brian Armstrong
Investor unease escalated in August when Coinbase first hinted at the development of a new Wrapped Bitcoin (WBTC), referred to as Coinbase BTC (cbBTC).
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Analyst claims BlackRock and Bitcoin ETFs are not to blame for the BTC price decline.
Since their inception in January, the ETFs have accumulated over $59.2 billion in total on-chain holdings, according to data from Dune.
BlackRock’s IBIT remains the leading Bitcoin ETF, holding a market share of over 38% and more than $22.5 billion in on-chain assets.
Bitcoin ETF issuers. Source: Dune
Despite the mounting accusations directed at ETFs, analysts, including Eric Balchunas, a senior ETF analyst at Bloomberg, assert that these funds are not the reason behind Bitcoin’s recent price drop, which is more attributable to actions by native Bitcoin holders.
In a post on X on September 15, Balchunas noted:
By February 15, ETFs accounted for approximately 75% of new investments in Bitcoin, which had surpassed the $50,000 mark.
Magazine: Trump buys burgers with BTC, Arthur Hayes skeptical on rate cuts, and more: Hodler’s Digest, Sept. 15 – 21.