Considerations expressed by the cryptocurrency neighborhood concerning Coinbase’s dealing with of Bitcoin ETFs have been addressed by Coinbase CEO Brian Armstrong. Justin Solar’s tweet, which expressed doubt about centralized Bitcoin exchange-traded funds (ETFs) on the grounds that they don’t have proof of reserve and might freeze anybody’s steadiness at any time, sparked this dialog.
How Coinbase manages ETFs
Armstrong responded by using the event to elucidate Coinbase’s stance and its method to managing ETF-related actions. He gave the neighborhood confidence by saying that each one of Coinbase’s ETF minting and burning operations are lastly settled on-chain, guaranteeing safety and transparency.
Baldilocks right here.
Unsure what that is all about TBH. All ETF mints and burns we course of are in the end settled onchain. Institutional purchasers have commerce financing and OTC choices earlier than trades are settled onchain. That is the norm for all our institutional purchasers. All funds…
— Brian Armstrong (@brian_armstrong) September 14, 2024
Earlier than the final on-chain settlement was carried out, Armstrong harassed that institutional purchasers are supplied with quite a lot of choices, together with commerce financing and OTC (over-the-counter) trades. This preserves protected on-chain settlements whereas granting large-scale consumer’s flexibility. Armstrong clarified a number of necessary issues, one in all which was audits. Armstrong introduced up the difficulty of proof of reserves, however he additionally identified that Coinbase is audited yearly by the revered auditing agency Deloitte.
Institutional purchasers ought to really feel extra assured in regards to the safety and authenticity of their funds because of this. He talked in regards to the traits of centralized Bitcoin ETFs (cbBTC) in addition to acknowledging that buyers do in truth put their belief in a centralized custodian to carry the underlying cryptocurrency. Coinbase has by no means asserted something completely different concerning this.
Centralization issues
Armstrong famous that though centralized custody carries some inherent dangers, that is the worth for permitting important institutional capital to enter the Bitcoin market. The dialogue touches on a deeper concern of belief and decentralization ideas that the cryptocurrency neighborhood is worried with.
Since Bitcoin was supposed to perform on decentralized ideas, there’s nonetheless distrust concerning centralized management over property prefer it even with Coinbase’s open course of and yearly audits.