Coinbase Custody is gearing up for the eagerly anticipated spot Bitcoin ETFs, making strategic adjustments to its operations, as reported by Bloomberg on Dec 29. A Coinbase representative underscored the extensive preparations for ETF approval. They highlighted their systems’ rigorous design and testing to accommodate increased trading volume, enhanced liquidity, and general surges in demand.
This preparation involves more than just technical adjustments. Bloomberg revealed that executive reshuffling has occurred within Coinbase Custody, with CEO Aaron Schnarch reportedly stepping down. Rick Schonberg is his successor at Coinbase. He has been a Coinbase employee since 2021 and has a background in traditional finance, having previously worked at Goldman Sachs.
Furthermore, financial institutions must store cryptocurrency with a qualified custodian, and Coinbase Custody fulfills this role as a rule. Several notable ETF applicants, including BlackRock, Franklin Templeton, and Grayscale Investments, have chosen Coinbase Custody to manage their Bitcoin holdings for their respective ETFs.
VanEck, in its latest update, also identified Coinbase Custody as a potential additional custodian, although Gemini remains its primary choice for custody services.
Coinbase Custody’s Surveillance Role Boosts ETF Credibility
Beyond its custodial role, Coinbase itself has become a part of surveillance-sharing agreements within many ETF applications. This move addresses regulators’ concerns about market manipulation, providing a credibility boost to the ETF approval process.
The news of exchange Custody’s adjustments coincided with last-minute amendments from spot Bitcoin ETF applicants. BlackRock and Valkyrie provided updates on authorized providers, while VanEck affirmed its reliance on cash creation and redemption models. In addition, on Dec 29, Invesco, Fidelity, WisdomTree, and Bitwise filed amendments.
Spot Bitcoin ETF applicants, including Ark Invest, Grayscale, and Pando Asset AG, filed updates earlier in December, with the deadline for modifications set on Dec 29. Ark Invest has tasked the Securities and Exchange Commission (SEC) with deciding on its spot Bitcoin ETF by Jan 10, 2024.
However, this could potentially open the door for other applications in the process. The crypto community awaits this decision with bated breath, as it could mark a significant milestone for the industry.
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