As a reminder, the custodian is the organisation responsible for holding and securing the BTC underlying ETFs. In the case of Bitcoin exchange traded funds, the custodian ensures that the fund's coin assets are safe and secure and protected from theft or hacking. It also manages digital assets, stores private keys, and provides regulatory co-operation and audits.

Coinbase itself continues to develop in other directions. In particular, in the first half of September, the exchange announced the launch of wrapped Bitcoin in the form of a token called cbBTC. This way BTC holders will be able to get their analogue in the Base second-level network and use the value in the decentralised finance industry.

Now it is used by more than 3,500 people in the said chain. Moreover, the total average volume of transactions of these addresses with BTC per day in the Base network is $472 million.

Growth in the number of cbBTC tokens in the Base network

Base itself is significantly ahead of other second-tier Efirium-based networks by various indicators. For example, the number of active addresses here the day before exceeded the level of 2 million units.

The number of active addresses in the second-tier networks based on Etherium

According to IntoTheBlock analysts, the reasons for the growth of activity of Base users are airdrops, the recent launch of wrapped Bitcoin under the ticker cbBTC, as well as the popularity of Basenames. We’re talking about the analogue of ENS domains on the Etherium network.

What’s wrong with the Coinbase crypto exchange and BlackRock’s ETF?

BlackRock has filed an amendment requiring withdrawals within twelve hours from custodian accounts for ETFs – in this case, we’re talking about Coinbase.

The document in question was filed with the SEC on 16 September, but is only now being made public. Here is a portion of it, which Cointelegraph cites.

Subject to confirmation of the above required minimum balance, Coinbase will process the withdrawal of digital assets from a custodial account to a public blockchain address within twelve hours of receiving an instruction from the customer or the customer’s authorised representatives.

Coinbase cryptocurrency exchange application

BlackRock’s amendment follows a wave of investor concerns about Coinbase’s ETF servicing practices. They are increasingly asking Coinbase representatives to provide sane proof of BTC purchases on behalf of spot exchange-traded funds.

This is important because Coinbase is the custodian for ten of the eleven Bitcoin-based spot ETFs, as well as eight of the nine recently approved spot Efirium-ETFs in the United States.

Inflows and outflows from spot Bitcoin-ETFs by day

Despite the consistently high inflow of funds from Bitcoin-ETFs, the price of BTC has continued to stay within a narrow horizontal channel on the chart for the past three months.

For example, in the previous week, spot exchange traded funds based on the first cryptocurrency attracted $397.2 million, which was a good result considering the previous similar periods.

Inflows and outflows from spot Bitcoin-ETFs by week

This is partly what has investors concerned that Coinbase is buying “paper BTC,” that is, Bitcoin-based debt. By doing so, the exchange is not creating new demand for the cryptocurrency by suppressing the growth of its price.

Rating of spot Bitcoin-ETFs in the United States

To dispel any doubts about the exchange, Coinbase CEO Brian Armstrong addressed his Twitter followers. He explained that any debt obligations are still secured by a transaction on the blockchain, i.e. a real bitcoin transaction. Here’s his quote.

If you need audits, Deloitte audits us annually, we’re a public company. I doubt our institutional clients want people to be privy to all their addresses, and it’s not our business to share for them. Here’s what it looks like if you want a bunch of institutional money flowing into Bitcoin.


Coinbase became a public company in the spring of 2021. Accordingly, the giant does undergo regular reviews by regulators and auditors, which is relevant to other such organisations.


Coinbase CEO Brian Armstrong

According to Eric Balchunas, a senior ETF analyst at Bloomberg, despite the mounting accusations, ETFs were not the cause of Bitcoin’s recent price drop. His perspective is as follows.

I understand why these theories exist and people want to blame it on ETFs. Because it’s too unthinkable that dedicated holders of cryptocurrency are selling it. But they’re quite doing it. All ETFs and BlackRock have done is repeatedly save the price of BTC from the abyss.


After the markets collapsed in early August, Bitwise's head of research Ryan Rasmussen said that spot ETFs on cryptocurrency in the U.S. had just cushioned the scale of the market's drawdown. Still, due to the presence of large players in the niche, their capital contributes to better liquidity in the markets. This means that popular digital assets are less susceptible to sharp drawdowns.


According to analytics platform Dune, ETFs have accumulated more than $59.2 billion under management since their launch in January. Here’s a related screenshot.

Volume of coins under management of spot Bitcoin ETFs


Overall, BlackRock's IBIT remains the largest Bitcoin-ETF, with more than 38 percent of the market and more than $22.5 billion worth of BTC under management. Therefore, it remains to accept the fact that the company's influence on the market and cryptocurrency in particular will continue to grow in the future. Well, fans of digital assets should pay more and more attention to capital flows within exchange-traded funds.