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Author: Admin | 2025-04-28
Custodian, the Coinbase Custody Trust Company, is licensed to operate as a fiduciary in the state of New York. The underlying bitcoin is stored in the Coinbase Vault, a cold storage solution (meaning it isn’t connected to the internet) combining physical security, consensus computation and strict process controls. Deloitte, a ‘big four’ accounting firm, audits Coinbase’s custody solution. Fidelity stores its bitcoin with Fidelity Digital Assets, a subsidiary regulated by the New York Department of Financial Services.Physical Bitcoin ETPsPhysical bitcoin ETPs differ from spot ETFs in the way they’re structured. Most of these products are ETCs, which were originally designed to provide access to the commodity market, but their remit has since expanded to currencies and crypto. ETCs are bankruptcy-remote special purpose vehicles (SPV). An SPV is a subsidiary, a separate company from the provider with its own balance sheet, and the appointment of a trustee to manage the underlying assets minimises the risk of bankruptcy. The SPV issues debt securities backed by physical bitcoin held by a custodian.The majority of physical bitcoin ETPs are listed on European exchanges, including the CoinShares Physical Bitcoin ETP, which launched in 2021 and trades on the Nasdaq Stockholm. Its underlying bitcoin is stored by Komainu, a digital asset custodian founded in 2018 by Japanese bank Nomura, crypto security company Ledger and CoinShares. Komainu’s institutional-grade custody solution stores assets onchain and protects them using hardware security module vaults (physical storage) and cryptographically secured multi-party computation wallets. Komainu is regulated by the Jersey Financial Services Commission and the Dubai Virtual Assets Regulatory Authority. Registered Certified Public Accountant the Network Firm provides proof of reserves for CoinShares range of physical ETPs. Comparison between Spot Bitcoin ETFs and Physical Bitcoin ETPsETFs and ETPs have two fundamental characteristics in common- they track the performance of bitcoin, and they buy and hold the underlying asset. But there are several differences worth noting.Regional preferences explain why ETF is used in the US and ETP in Europe. Likewise, ‘spot’ and physical refer to products priced for the immediate custody of the underlying asset by the vehicle, as opposed to a bitcoin future, which involves settling a trade at a fixed price on a date in the future. ‘Settling’ a trade refers to how providers buy and sell the bitcoin backing the products they issue. ETFs settle in cash, which means the provider buys the underlying bitcoin using fiat currency, the standard
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