Bloomberg Analyst Defends Coinbase, BlackRock’s Serious Approach
In a recent turn of events, Bloomberg senior ETF analyst Eric Balchunas came forward to defend Coinbase against controversial allegations that the exchange was not using BlackRock’s funds to buy actual Bitcoins. The rumors that surfaced on social media claimed that Coinbase was issuing letters of debt instead of backing IBIT ETF with Bitcoin and manipulating Bitcoin’s price with the asset manager’s funds. However, Balchunas refuted these claims, stating that BlackRock would not tolerate such behavior from Coinbase.
BlackRock’s Serious Approach
Balchunas emphasized that BlackRock, a global investment management corporation, is ‘not messing around’ when it comes to their investments in Bitcoin. He mentioned that if BlackRock discovered that Coinbase was ‘screwing around’ with their Bitcoins, they would take decisive action. Balchunas also pointed out that any such behavior would violate regulations, highlighting the seriousness with which BlackRock approaches its investments.
Coinbase CEO’s Response
Coinbase CEO Brian Armstrong also addressed the allegations, clarifying that all mints and burns related to the ETFs in the firm’s custody are ultimately settled on-chain. He explained that institutional clients have off-chain options before trades are settled on-chain, such as over-the-counter desk trading. Armstrong emphasized that all funds are settled in Coinbase Prime vaults within one business day, ensuring transparency and efficiency in the process. He highlighted that this is crucial for attracting institutional money into Bitcoin.
ETF Holding Back Sell Pressure
Balchunas delved into the reasons behind the emergence of the theory that Coinbase was not using BlackRock’s funds to buy actual Bitcoins. He mentioned that Bitcoin investors have been searching for a reason behind the selling pressure that has kept BTC in a downtrend since March. Despite the skepticism surrounding ETFs, Balchunas emphasized that they have played a crucial role in preventing the devaluation of Bitcoin. He drew parallels with gold ETFs, which faced similar skepticism from gold investors, highlighting the cyclical nature of such controversies.
Controversy Surrounding cbBTC
The new synthetic Bitcoin product by Coinbase, cbBTC, also came under scrutiny recently, with its market cap surpassing $100 million on its launch day. Tron founder Justin Sun raised concerns about cbBTC lacking proof of reserves and being susceptible to government intervention, which could freeze users’ balances. Sun criticized cbBTC as a representation of central bank Bitcoin, where users have to trust a centralized custodian to store their BTC. Armstrong responded to these allegations, acknowledging the need for trust in a centralized custodian but stressing the importance of transparency and security in the process.
Overall, the controversy surrounding Coinbase and BlackRock’s approach to Bitcoin investments highlights the complexities and challenges in the cryptocurrency market. While allegations and speculations may arise, it is crucial for all stakeholders to uphold transparency, regulatory compliance, and trustworthiness to ensure the integrity of the industry. As the digital asset landscape continues to evolve, collaboration and communication between key players like Coinbase and BlackRock will be essential in driving innovation and sustainability in the market.
