By George Ward
Coinbase, a leading US cryptocurrency exchange, is extending its reach into the global Bitcoin ETF market by providing custody services for a new Australian Bitcoin ETF. DigitalX, an Australian firm, has chosen Coinbase to safeguard the assets of its DigitalX Bitcoin ETF (BTXX), which began trading on July 12.
This partnership emphasizes Coinbase’s growing role in the global cryptocurrency ecosystem. DigitalX received approval to list its BTXX ETF on the Australian Securities Exchange (ASX) on July 9.
Coinbase’s Growing Role in Bitcoin ETF
Coinbase has established itself as a prominent player in the Bitcoin ETF sector in the United States and internationally. Since receiving its approval to operate in the US, Coinbase has become the custody provider for several Bitcoin and Ether ETFs.
Its clients’ list includes notable funds such as BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale Bitcoin Trust ETF (GBTC). Coinbase’s role as a custodian involves securely holding the digital assets that underpin these ETFs.
With over 12 years of experience, Coinbase claims to offer an institutional-grade custody solution that emphasizes safety and trust. This experience has helped it become a preferred partner for various ETF issuers looking to provide investors with secure access to Bitcoin.
However, Coinbase’s dominance in this space is not without controversy. Some industry experts argue that its extensive involvement in retail and institutional Bitcoin services makes it a target for hacking or state intervention. Others argue that even if Coinbase experiences financial troubles, it has mechanisms in place to protect investors’ assets within the ETFs.
The Rise of Bitcoin ETFs in Australia
The introduction of these ETFs in Australia is part of a broader trend of increasing acceptance and integration of Bitcoin into traditional financial markets. The approval of DigitalX’s Bitcoin ETF is the second spot BTC ETF to be listed on the ASX.
The first, the VanEck Bitcoin ETF (VBTC), launched on June 20, 2024. Unlike DigitalX, VanEck partnered with Gemini, a crypto exchange founded by the Winklevoss twins, for custody services rather than Coinbase.
21Shares Upgrades Ether ETF
Meanwhile, 21Shares has announced the integration of Chainlink’s proof-of-reserve (PoR) system into its Ether ETF. This move is aimed at boosting transparency and trust among its investors.
The integration of Chainlink’s PoR system ensures that the reserve data for the Ether ETF will be publicly verifiable. This data will be pulled directly from the Coinbase exchange, ensuring accuracy and reliability.
Thus, investors will have access to real-time reserve data and a comprehensive reserve history, enhancing the transparency of the ETF. Johann Eid, Chief Business Officer of Chainlink Labs, noted that 21Shares is playing a crucial role in promoting the adoption of digital assets. Also, the Chainlink platform is helping financial institutions achieve seamless tokenization on a global scale, a significant step forward for the industry.
A Testament to Global Crypto Adoption
The introduction of Chainlink’s PoR system into 21Shares’ Ether ETF follows the recent launch of the first spot Ether ETFs in the United States. Ophelia Snyder, co-founder and president of 21Shares, stated that the US approval of a spot Ethereum ETF is a testament to the growing adoption of cryptocurrencies worldwide.
This milestone brings the industry closer to bridging the gap between traditional finance and decentralized finance. 21Shares has a history of integrating Chainlink’s PoR solutions, having previously implemented it for their spot Bitcoin ETF.
More Crypto ETFs Expected Globally
In another development, Franklin Templeton and SBI Holdings have formed a new crypto ETF management company. This joint venture aims to launch a crypto ETF in Japan, contingent on regulatory approval.
The new company plans to offer a diverse range of investment solutions, including Franklin Templeton’s existing ETFs. Notably, Franklin Templeton is exploring the possibility of launching a spot Solana (SOL) ETF, given the cryptocurrency’s increasing adoption.