Executives at Coinbase used a recent corporate ‘AMA’ call to address the growing scrutiny surrounding Bitcoin exchange-traded funds, defend the firm’s dominant role as a custodian and push back against claims that spot Bitcoin ETFs are backed by “paper Bitcoin” rather than real assets.
In response to a question from Bloomberg’s James Seyffart, Coinbase CEO Brian Armstrong said the company holds a leading share of the US-listed Bitcoin ETF custody market, estimating Coinbase’s share at more than 80%. He framed that concentration as a competitive advantage rather than a risk.
“We have pretty dominant market share in terms of custody for the ETFs. I see that as a strength. We’re the trusted counterparty on the institutional side. I think we’re well ahead there and it’s a great business for us,” Armstrong said on the call.
He acknowledged concerns about concentration risk, but noted that large ETFs often diversify custodians by asset scale, which has allowed competitors to gain limited market share over time.
Armstrong said Coinbase remains the dominant custodian for U.S. bitcoin ETFs, with roughly “80%-plus market share,” while noting that larger funds often diversify custodians as they scale, a shift he called “healthy and good.”
Armstrong touched on the security of Coinbase’s custodial infrastructure, pointing to cooling systems that are regularly penetration tested and audited.
He said Coinbase 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.
When Seyffart asked about the sentiment circulating on social media that Bitcoin ETFs are not fully backed by real Bitcoin. Armstrong said he doesn’t understand where these concerns stem from, and reiterated that spot Bitcoin ETFs are required to be fully backed by the underlying asset.
Coinbase CFO Alesia Haas offered more details, explaining that critics often call for public “proof of reserves,” such as the disclosure of on-chain wallet addresses linked to ETF holdings. Haas said Coinbase does not disclose client subscription addresses for security and privacy reasons, but emphasized that ETF issuers and custodians can independently verify their assets on the chain.
Haas said the custodian is “separately audited” and noted that Coinbase produces SOC 1 and SOC 2 reports that show controls are in place and operating effectively.
These audits reconcile holdings back to the blockchain and confirm that assets are segregated by clients, including ETF issuers.
Haas said each custodian client can see its assets on the chain and knows the addresses associated with its holdings. “We would never disclose addresses that we hold on behalf of customers,” she said, adding that Coinbase could explore tools that allow customers to self-disclose proof of reserves if they choose.
Coinbase executives touch on Clarity Act
Later in the call, Armstrong and Haas addressed regulatory developments surrounding Coinbase’s position on proposed US crypto market structure legislation, often referred to as the CLARITY Act.
Armstrong pushed back on claims that Coinbase was withdrawing support for the bill, saying the company objected to the specific draft, which it considered unworkable.
Coinbase has spent more than $100 million over several years advocating for regulatory clarity, Armstrong said, arguing that previous drafts made concessions to traditional financial trade groups that could stifle crypto innovation.
He said negotiations are ongoing and lawmakers, regulators and industry participants remain engaged.
Armstrong said the company expects a market structure bill to pass, arguing that statutory clarity would provide long-term certainty beyond changing leadership at agencies like the SEC. If the legislation stalls, he said Coinbase would continue to operate under existing rules while he seeks clarity through regulators or the courts.
“I think the bill will get done,” Armstrong said. “It’s in everyone’s best interest at this point.”