Coinbase Becomes Custodian for WisdomTree’s Bitcoin ETF, Aiming for SEC Approval
Crypto exchange Coinbase (COIN) will be the official custodian for WisdomTree’s spot Bitcoin ETF, according to the asset manager’s recently amended S-1 filing.
“Coinbase Custody Trust Company LLC is the custodian of the Trust with respect to the Trust’s bitcoin holdings,” reads the November 16 filing. In its original filing on June 20, the sponsor named “U.S. Bank, National Association” as its custodian.
WisdomTree was one of nearly a dozen sponsors to enter the Bitcoin ETF race immediately after BlackRock filed for its ETF in June.
Many sponsors and exchanges have followed BlackRock’s lead in terms of how to structure their funds and word their applications to meet regulatory expectations, given BlackRock’s stellar track record with the Securities and Exchange Commission (SEC).
Not only has Blackrock chosen Coinbase as its custodian, but the Cboe BZX Exchange – on which shares of BlackRock’s and WisdomTree’s funds will trade – has selected Coinbase as its surveillance sharing partner for both funds.
Other applicants that have selected Coinbase for similar arrangements include Fidelity, VanECK, Ark Invest/21Shares, Valkyrie, and Galaxy/Invesco.
Coinbase’s Responsibilities
As a custodian, Coinbase is responsible for “safekeeping all of the bitcoin owned by the Trust,” including any bitcoin
sent to WisdomTree’s trust by authorized firms in exchange for shares.
Coinbase will also sell Bitcoin at the sponsor’s request for the purposes of paying sponsor fees or other Trust expenses and liabilities.
“The Bitcoin Custodian will keep a substantial portion of the private keys associated with the Trust’s bitcoin in “cold storage” or similarly secure technology,” the amended filing added.
Coinbase is the only publicly traded cryptocurrency exchange, and is subject to public audits by big-four accounting firm Deloitte. This gives it an air of legitimacy in the scandal ridden crypto world plagued bankruptcies, hacks, and opaque dealings at rival exchanges, such as FTX.
COIN currently trades for $105.80, up 11% over the past 5 days and 36% over the past month.
Though the SEC sued Coinbase in June for a plethora of securities law violations, the agency agrees that Bitcoin (BTC) does not qualify as a security. The agency also lost its lawsuit to Grayscale in August, boosting the outlook of ETF approval for all applicants.
The agency’s next deadline to approve or deny the WisdomTree Bitcoin Trust is January 15, though it will have to make a decision on Ark’s ETF 5 days sooner.
