It's already happening! Traditional financial institution are working with crypto companies. Well we did not see this coming but its already happening, the crypto space which started as a community of small investors is gradually growing into trillion dollar market cap, lately we can say it adoption have been going pretty well, despite several criticism from centralized users which called the emerging crypto space a bubble that will explode soon, we are counting decade into its inception which has been a long successful year of building lots of scalable technological innovation for both the financial sectors and other institutions.
Spot bitcoin exchange traded funds (ETF), which one of the world's largest assets holders BlackRock have been clamouring for have been filed about a decade ago by Gemini founders Cameron and Tyler Winklevoss back in July 2013 this two pioneers open the gateway for other bitcoin ETF applications which we are witnessing today, several notable traditional and crypto based companies have tender applications for it approval on different occasions which are some how been rejected due to market conditions and concerns for investors protection as the security exchange Commission (SEC) have always pointed the crypto space is fully manipulated and need regulator to protect investors against fraudulent activities and money laundering.
Inline with SEC set out rules to protect investors most traditional financial institution seeking a spot bitcoin ETF approval have worked hand in hand to keep up with U.S SEC standard by working with reputable crypto exchange to serve as custodians of their shares.
Traditional financial institutions the likes of BlackRock, VanEck, Fedelity, Ark Invest’s 21Shares, Valkyrie, Invesco and WisdomTree have added Coinbase as their sole custodian wallet for holding their spot bitcoin ETF share. These are top notch traditional investment institutions contending for a spot bitcoin ETF approval WisdomTree is the latest on the list of the above contenders which added Coinbase as a trustee to manage their spot ETF products.
These traditional companies are managing and holders of billion dollar assets I guess these are good reasons why the market always reacts to each spot ETF hype the ball is currently in SEC court to approve an ETF file so the long wait will be over.
What do custodians do?
In layman's terms custodian could be a guardian, someone who oversees or take care of another individual like a parent to children kind of guardian.
In this context the above traditional institutions will be allowing Coinbase one of the largest crypto exchange to take care of digital coins backing their funds share. Coinbase will also be in charge of sharing information related to trading activities they will allow to be in charge of customer information as well.
Since SEC have always been concerned about its investors and market manipulation activities with Coinbase a reputable exchange recognized by SEC to handle all customers and trading related information for these traditional spot ETF contenders the heat surrounding bitcoin spot ETF approval will be minimized.
Why Coinbase
Several questions have been raised, will U.S SEC finally approve the first bitcoin ETF since most traditional companies contending for ETF approval have meet all the set out rules provide by the regulatory authorities although according to some experts SEC are not still satisfied with what is presented on their table, let's watch out for what they will be demanding next we have no clue yet.
On several occasions U.S SEC and Coinbase have had backlash with few court filing over what should be listed as securities and none security token, with their not so good history Coinbase have always thrive to key into SEC's stipulated guideline.
With Coinbase always keying to SEC guidelines they seem to have lately been on the list of most traditional institutions watchlist as one other the notable exchange abiding to SEC rules it's very simple dance to centralized tune and you will be favoured if SEC will have absolute trust in Coinbase to oversee all these backed share funds and disclose necessary information to SEC I guess all will be in one agreement.
Why Coinbase? its primarily because they have gain trust from SEC and the mentioned traditional institutions applying for bitcoin spot ETF but as mentioned earlier Coinbase have also been playing their part lately keeping up with all U.S SEC policies and regulations, Coinbase trustworthiness and reputation which includes it track records, secure operations and compliance with regulatory standards makes them stand out to be eligible crypto exchange choice for these traditional institutions we can also add that Coinbase have been in the crypto space for long which makes them to be exposed with experience on how to deal with digital assets like bitcoin and other altcoins their experience in the crypto space can as well make a go option choice for traditional users to allow Coinbase be their backed funds custodian.
I believe it might be because Coinbase is more regulation compliant in the US domain than others and SEC can always interact with them whenever the need arises
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