After receiving dozens of applications, the Securities and Exchange Commission (SEC) finally gave the green light to 11 spot Bitcoin exchange-traded funds (ETFs) on Jan. 10. The decision is expected to bring new hype and investors into Bitcoin because it allows for a new, equity-based form of investment into the cryptocurrency.
While much of the discussion around the benefits of Bitcoin ETFs has been focused on firms sponsoring them and new investors, one party has been left out of the discussion.
The custodian of the ETFs also plays a major role in making them available to the everyday investor. Coinbase (NASDAQ:COIN) houses the Bitcoin for 10 out of the 13 spot Bitcoin ETF applications.
Don’t Miss:
This brokerage offers custom rewards for users to switch – the biggest reward so far for 1 user is $19,977.48. Will yours beat it?
The last-standing top crypto exchange without a major security breach offers what now?
An ETF works by a sponsoring firm collecting a pool of assets and dividing them into shares that can be sold to investors. Most of the time, the sponsoring firm can hold the assets itself. For instance, the most popular ETF — SPDR S&P 500 ETF Trust (NASDAQ) SPY — is a collection of all the stocks in the S&P 500. Sponsoring firm State Street Global Advisors holds the individual stocks.
Regulations make this more difficult for sponsoring companies In the case of Bitcoin ETFs. Because of this, the companies must look elsewhere for a place to house Bitcoin, which they can then package into shares and deliver to investors.
The logical choice for most of the spot Bitcoin ETFs was Coinbase. As the largest crypto trading platform in the world, the ETF sponsors are confident that they can trust Coinbase with the role of custodian.
Coinbase is known for its safety and security for investors as well as low transaction fees. Cybersecurity and the history of safety are the most important issues for the ETFs. Since the beginning of crypto, hacks have been commonplace. However, Coinbase’s security measures use machine learning, two-factor authentication and a vault system to ensure that users’ investments are safe. This was particularly attractive for ETFs looking for a custodian.
Additionally, whenever the ETFs create new shares, they must buy Bitcoin on Coinbase. Then they…
Click Here to Read the Full Original Article at Cryptocurrencies Feed…
