Global asset management giant, BlackRock, is changing its Bitcoin ETF rules following investor concerns about Coinbase’s settlement practices. BlackRock has filed an amendment with the U.S. Securities and Exchange Commission, requiring its ETF custodian, Coinbase, to process Bitcoin withdrawals within 12 hours. This follows growing investor unease over Coinbase’s custodial practices and demands for onchain proof of Bitcoin purchases for the spot ETFs.
Despite the recent surge in institutional investments via Bitcoin ETFs, Bitcoin’s price has remained stagnant for the last three months. This led to concerns that Coinbase was purchasing Bitcoin IOUs for Bitcoin ETF issuers, which could potentially be impacting Bitcoin’s price. Nonetheless, Coinbase CEO, Brian Armstrong, has clarified that all ETF transactions are ultimately settled onchain.
As investor worries escalated, BlackRock and Bitcoin ETFs were incorrectly blamed for the decline in Bitcoin’s price. However, according to Eric Balchunas, senior ETF analyst at Bloomberg, the recent price slump was actually caused by native Bitcoin holders. Balchunas stated that the ETFs had, in fact, repeatedly saved it from further slipping. Launched in January, ETFs accounted for 75% of new investments in Bitcoin by mid-February. BlackRock’s IBIT remains the largest Bitcoin ETF, hosting over $22.5 billion worth of onchain holdings.