Executives at Coinbase used a recent company ‘AMA’ call To address the growing scrutiny surrounding Bitcoin exchange-traded fund, defend the firm’s role as custodians and push back against allegations that spot Bitcoin ETFs were backed by “paper Bitcoin” Instead of real assets.
Answering a Question Bloomberg’s James SeyffartBrian Armstrong, Coinbase CEO, stated that Coinbase has an overwhelming share of the U.S. Bitcoin ETF custody markets. Armstrong estimated Coinbase’s share to be more than 80 percent. This concentration was framed as an advantage, not a threat.
“We do have pretty dominant market share in terms of custody for the ETFs. I see that as a strength. We’re the trusted counterparty on the institutional side. I think we’re far ahead there, and it’s a great business for us,” Armstrong told the reporter on his call.
He was concerned about the risk of concentration but added that large ETFs Diversify your custodians when assets grow. This has helped competitors gain a limited share of the market over time.
Armstrong stated that Coinbase is the largest custodian of bitcoin ETFs in the United States, accounting for approximately “80% plus market share,” While noting the fact that as funds grow, they often change custodians. This is what he calls a “shift”. “healthy and good.”
Armstrong spoke about the Coinbase custody infrastructure’s security, and pointed to cold storage Systems that undergo regular penetration tests and audits.
Then he said Coinbase The company has also hired cryptographers in order to strengthen its defenses. Added he, large financial institutions and government customers also perform their own audits.
Seyffart asked Seyffart about the sentiment that circulates on social media, that Bitcoin ETFs do not have a full backing by Bitcoin. Armstrong says he cannot understand these fears, and emphasizes that Bitcoin ETFs have to be fully supported by Bitcoin.
Alesia Haas is the CFO of Coinbase. She explains that there are many times when critics ask for more information. “proof of reserves,” Disclosure of wallet addresses on chain tied to ETFs, for example. Haas stated that Coinbase doesn’t disclose wallet addresses to clients for reasons of security and confidentiality, but emphasized that ETFs issuers can verify assets independently on the chain.
Haas said the custody business is ‘separately audited,’ noting that Coinbase produces SOC 1 and SOC 2 reports that demonstrate controls are in place and operating effectively.
These audits confirm the segregation of assets by ETF issuers and clients.
Haas says that every client of custody can view their assets in the chain and know the address associated with them. “We would never disclose addresses that we hold on behalf of clients,” Coinbase is exploring tools that would allow customers to reveal proof of their reserves themselves, should they so choose.
Coinbase executives speak on Clarity Act
Armstrong and Haas also addressed Coinbase’s position on regulatory developments. U.S. crypto market structure legislation CLARITY Act, or the CLARITY Act as it is also known.
Armstrong has reacted to the claims that Coinbase is a scam withdrew support For the bill. They said that the firm objected specifically to a draft they deemed unworkable.
Armstrong, who is the CEO of Coinbase, said that over several years, Coinbase spent more than 100 million dollars advocating regulatory clarity. He argued that previous drafts were a concession to traditional financial groups, which could have stifled crypto innovation.
He noted that the negotiations were ongoing, with lawmakers, industry players, and regulators all remaining engaged.
Armstrong told reporters that his company is expecting a new market structure law to be passed. He also argued that clarity in the legislation would bring long-term security, beyond the change of leadership within agencies such as SEC. In the event that legislation fails, Armstrong said Coinbase’s business would be conducted under current rules. It will seek clarification through regulatory agencies or court proceedings.
“I think the bill will get done,” Armstrong said “It’s in everyone’s interest at this point.”
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Source: bitcoinmagazine.com
