Cryptocurrency exchange Coinbase is doubling down on its support of global spot Bitcoin exchange-traded funds (ETF), becoming a custody partner for a Bitcoin ETF in Australia.
Australia’s DigitalX, the issuer of the spot Bitcoin ETF called DigitalX Bitcoin ETF (BTXX), has selected Coinbase as the custody provider for its spot Bitcoin (BTC) fund, according to the official BTXX fact sheet.
Launched on July 12, the DigitalX Bitcoin ETF aims to provide returns that mirror the performance of Bitcoin by maintaining long-term holdings of BTC.
DigitalX announced it received approval to list its spot Bitcoin ETF on the Australian Securities Exchange (ASX) on July 9.
“The fund is intended to be a passive holder of Bitcoin and will not buy and sell Bitcoin other than to facilitate redemptions and creation of Bitcoin interests,” BTXX’s fact sheet notes.
Coinbase is a major player in the global Bitcoin ETF infrastructure
One of the largest cryptocurrency exchanges in the United States, Coinbase has emerged as a prominent firm involved in enabling the infrastructure for global spot Bitcoin ETFs.
After being approved in the United States in January, Coinbase has become a partner and custody provider for 10 spot Bitcoin ETFs and eight of the nine newly approved Ether ETFs.
The most significant spot Bitcoin ETFs, including the Grayscale Bitcoin Trust ETF (GBTC) and BlackRock’s iShares Bitcoin Trust (IBIT), also rely on Coinbase as a Bitcoin custody provider.
“With a track record of over 12 years safekeeping digital assets at scale, we have developed the leading institutional-grade custody solution and will continue to maintain our company-wide approach to being the safest, easiest, and most trusted bridge to the crypto economy,” Coinbase said on its website.
Some industry executives previously argued that Coinbase’s dominance across retail and the Bitcoin ETFs poses a significant threat of hacking or state intervention. Others claimed that even if Coinbase goes bankrupt, there’s still a way to keep access to the Bitcoin ETF’s underlying funds.
The state of Australian Bitcoin ETFs
The global push of Bitcoin ETF approvals has impacted the Australian market. ASX debuted its first spot BTC ETF — the VanEck Bitcoin ETF (VBTC) — on June 20, 2024.
The spot Bitcoin ETF allows Australians to invest in BTC via exposure to VanEck’s US equivalent. VBTC is structured as a feeder fund that provides exposure to BTC by investing in VanEck’s Bitcoin Trust (HODL), a US Bitcoin ETF listed on the Chicago Board Options Exchange (CBOE).
Unlike Grayscale or BlackRock, VanEck has opted to work with the Winklevoss twins-founded crypto exchange Gemini as a custodian instead of Coinbase.
After its ASX listing on July 12, the DigitalX Bitcoin ETF became the second spot Bitcoin ETF to be approved on the stock exchange after VanEck’s listing in June.
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