Arkham Intelligence Identifies Four BTC Exchange-Traded Products (ETPs) Addresses, Raising Concerns for ETF Providers
Crypto News – On-chain analytics firm Arkham Intelligence has successfully identified the public addresses associated with four prominent Bitcoin (BTC) exchange-traded products (ETPs), a development that increases the total count of known BTC ETP providers to five.
The addresses linked to the ETPs offered by renowned financial entities such as BlackRock, Bitwise, Fidelity, and Franklin Templeton have been pinpointed by Arkham Intelligence.
In terms of holdings, the data unveils that Fidelity, in particular, possesses a substantial $1.21 billion worth of BTC within its Fidelity Wise Origin Bitcoin Fund, which is securely managed by Fidelity Digital Asset Services LLC. Similarly, BlackRock, Bitwise, and Franklin Templeton have substantial BTC holdings, with $1.16 billion, $422.68 million, and $47.09 million respectively, all of which are held on the Coinbase Prime Custody Platform.
It’s noteworthy that Coinbase serves as the custodian for eight out of the 11 existing Bitcoin ETFs, a concentration that some industry experts have identified as a potential risk. Custodians are responsible for safeguarding the private keys required to manage BTC holdings. In contrast, the VanEck Bitcoin Trust relies on Gemini, the cryptocurrency exchange established by Cameron and Tyler Winklevoss, for custodial services.
In February of the previous year, the US Securities and Exchange Commission (SEC) introduced proposals for new regulations governing crypto custodians, with plans to implement these regulations later in the year. The aggregation of billions of dollars in cryptocurrency holdings introduces the possibility of a single point of failure, which could result from a cybersecurity breach or legal complications, ultimately jeopardizing customer funds. Furthermore, a breach of Coinbase’s database could potentially expose sensitive transaction details that institutions may prefer to remain private.
CoinMetrics, an analytics firm co-founded by prominent crypto venture capitalist Nic Carter, underscores the necessity of evolving research methodologies as Bitcoin continues to mature. The company’s recent blog post emphasized the critical importance of thorough research in keeping pace with Bitcoin’s development.
Coinbase also recently disclosed that it received over 12,000 requests from law enforcement agencies in 2023, primarily pertaining to criminal investigations. Additionally, the exchange is currently embroiled in a protracted legal dispute regarding the regulatory classification of several cryptocurrency assets.
The introduction of US-based Bitcoin ETFs earlier this month has had ripple effects globally, notably in Europe, where existing funds experienced a loss of approximately 5,000 BTC. In response, European exchange-traded product (ETP) providers, including Invesco and WisdomTree, have drastically reduced their fees by up to 60%. For instance, fees for the WisdomTree Physical Bitcoin ETP have decreased from 0.95% to 0.35%, while Invesco lowered charges for its Physical Bitcoin ETP from 0.99% to 0.39% of assets under management.
Prior to the launch of their US counterparts, European and Canadian Bitcoin ETFs represented among the few regulated options available to institutional investors. Notably, 21Shares, a European ETF provider and partner of ARK Invest’s US Bitcoin ETF, holds a prominent position in the European ETF landscape.