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Author: Admin | 2025-04-28
The vault of a third-party custodian. Ten of the 12 currently trading spot Bitcoin ETFs use Coinbase (COIN) as their Bitcoin custodian. The only exceptions are the Fidelity Wise Origin Bitcoin Fund (FBTC), which uses Fidelity itself as a custodian, and the VanEck Bitcoin Trust (HODL), which uses Gemini. Coinbase's dominance in Bitcoin ETF custodianship has created concerns about custodianship risk. If Coinbase ran into severe financial trouble in the future — for example, due to a cyberattack, a government penalty, or a decline in its revenue — would the holdings of Bitcoin ETFs be safe? There are mechanisms by which ETFs — and investors themselves — could recover their holdings in the event of a Coinbase bankruptcy, but they wouldn't necessarily be instant or automatic. So custodianship risk may be something to consider while shopping for a spot Bitcoin ETF. » Interested in more ETFs? Check out the best ETFs in terms of one-year performance.Disclosure: The author and editor owned Bitcoin at the time of publication.
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