Critics are claiming that Coinbase, the custodian for most Bitcoin ETFs, including BlackRock, is not actually buying the Bitcoin requested by these funds, but instead issuing "paper" Bitcoin or IOUs. Coinbase CEO Brian Armstrong dismissed the rumors, stating that all ETF mints and burns are settled on-chain. However, critics pointed to a recent amendment in BlackRock's ETF registration that requires Coinbase to release Bitcoin to the asset manager within 12 hours. Bloomberg ETF analyst Eric Balchunas argued that the claims are hogwash and that custodians are legally required to hold the underlying assets. Balchunas further stated that the concerns mirror worries about gold ETFs. A Coinbase spokesperson confirmed that the rumors are unsubstantiated. BlackRock's ETF, IBIT, holds 357,732 BTC, and Bitcoin's price has surged following the approval of ETFs.



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