\n<\/p>\n
Executives at Coinbase used a recent company \u2018AMA\u2019 call<\/a> to address growing scrutiny around Bitcoin exchange-traded funds, defending the firm\u2019s dominant role as a custodian and pushing back against claims that spot Bitcoin ETFs are backed by \u201cpaper Bitcoin\u201d rather than real assets.<\/p>\n Responding to a question from Bloomberg\u2019s James Seyffart<\/a>, Coinbase CEO Brian Armstrong said the company holds a commanding share of the U.S.-listed Bitcoin ETF custody market, estimating Coinbase\u2019s share at more than 80%. He framed that concentration as a competitive advantage rather than a risk.<\/p>\n \u201cWe do have pretty dominant market share in terms of custody for the ETFs. I see that as a strength. We\u2019re the trusted counterparty on the institutional side. I think we\u2019re far ahead there, and it\u2019s a great business for us,\u201d Armstrong said on the call.\u00a0<\/p>\n He acknowledged concerns about concentration risk but noted that large ETFs<\/a> often diversify custodians as assets scale, which has allowed competitors to gain limited market share over time.\u00a0<\/p>\n Armstrong said Coinbase remains the dominant custodian for U.S. bitcoin ETFs, with roughly \u201c80% plus market share,\u201d while noting that larger funds often diversify custodians as they scale, a shift he called \u201chealthy and good.\u201d<\/p>\n Armstrong touched on the security of Coinbase\u2019s custody infrastructure, pointing to cold storage<\/a> systems that are regularly penetration tested and audited.\u00a0<\/p>\n He said Coinbase<\/a> has secured patents related to its custody technology and employs cryptographers to harden defenses against attacks. Large financial institutions and government clients also conduct their own audits, he added.<\/p>\n When Seyffart asked about sentiment circulating on social media that Bitcoin ETFs are not fully backed by real Bitcoin. Armstrong said he does not understand where those concerns originate, reiterating that spot Bitcoin ETFs are required to be fully backed by the underlying asset.<\/p>\n Coinbase CFO Alesia Haas offered more detail, explaining that critics are often calling for public \u201cproof of reserves,\u201d such as disclosure of on-chain wallet addresses tied to ETF holdings. Haas said Coinbase does not disclose client wallet addresses for security and confidentiality reasons, but stressed that ETF issuers and custody clients can independently verify their assets on-chain.<\/p>\n Haas said the custody business is \u2018separately audited,\u2019 noting that Coinbase produces SOC 1 and SOC 2 reports that demonstrate controls are in place and operating effectively.\u00a0<\/p>\n Those audits reconcile holdings back to the blockchain and confirm that assets are segregated by clients, including ETF issuers.<\/p>\n Haas said every custody client can see its assets on-chain and knows the addresses associated with its holdings. \u201cWe would never disclose addresses that we hold on behalf of clients,\u201d she said, adding that Coinbase could explore tools that allow clients to disclose proof of reserves themselves if they choose.<\/p>\n Later on in the call, Armstrong and Haas addressed regulatory developments around Coinbase\u2019s stance on proposed U.S. crypto market structure legislation<\/a> often referred to as the CLARITY Act.\u00a0<\/p>\nCoinbase executives touch on the Clarity Act<\/h2>\n