Coinbase CEO Addresses Concerns Over Bitcoin ETF Management

Coinbase CEO Brian Armstrong has addressed concerns raised by the cryptocurrency community regarding the company’s handling of Bitcoin ETFs.

The discussion was sparked by a tweet from Justin Sun, who questioned centralized Bitcoin exchange-traded funds (ETFs) due to the lack of proof of reserves and the potential for accounts to be frozen.

In response, Armstrong used the opportunity to clarify Coinbase’s stance and approach to ETF management. He assured the community that Coinbase’s ETF minting and burning processes are fully settled on-chain, ensuring both security and transparency.

Armstrong emphasized that, before the final on-chain settlements, institutional clients are given various options, including trade financing and OTC (over-the-counter) trading. This allows larger clients flexibility while maintaining safe on-chain processes. He also highlighted the annual audits performed by Deloitte, a highly respected auditing firm, further reassuring institutional investors about the security and transparency of their funds.

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Armstrong acknowledged that with centralized Bitcoin ETFs (cbBTC), investors are placing their trust in a centralized custodian to manage the underlying cryptocurrency. He emphasized that Coinbase has always been transparent about this arrangement.

While he admitted that centralized custody carries some risks, he noted that it enables large institutional capital to flow into the Bitcoin market. This raises a deeper issue for the cryptocurrency community, which values decentralization. Despite Coinbase’s open processes and yearly audits, some in the community still harbor concerns about centralized control over assets like Bitcoin, which was originally designed to operate on decentralized principles.

Alexander Stefanov