Coinbase executives used the company’s recent ‘AMA’ call to address growing scrutiny over Bitcoin trading funds, defending the company’s primary role as a custodian and disputing allegations that Bitcoin ETFs are backed by “Bitcoin paper” rather than real assets.
In response to a question from Bloomberg’s James Seyffart, Coinbase CEO Brian Armstrong said the company has a commanding share of the US-listed Bitcoin ETF storage market, estimating Coinbase’s share at more than 80%. He positioned that focus as a competitive advantage rather than a risk.
“We have a very dominant market share in terms of ETFs. I see that as a strength. We’re a trusted partner on the institutional side. I think we’re ahead of the curve there, and it’s a good business for us,” Armstrong said on the phone.
He acknowledged concerns about the risk of concentration but noted that large ETFs tend to separate custodians like the asset class, which has allowed rivals to gain limited market share over time.
Armstrong said Coinbase is still the dominant custodian of US bitcoin ETFs, with about “80% market share,” while noting that large funds tend to split custodians as they grow, a change he called “healthy and good.”
Armstrong touched on the security of Coinbase’s storage infrastructure, pointing to cold storage systems that are often subject to inspection and testing.
He said Coinbase has acquired patents related to its storage technology and uses cryptographers to strengthen its defenses against attacks. Major financial institutions and government clients are also conducting 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 that concern comes from, reiterating that Bitcoin ETFs need to be fully backed by the underlying asset.
Coinbase CFO Alesia Haas provided more details, explaining that critics often call the public “proof of reserves,” such as the disclosure of on-chain wallet addresses linked to ETF Holdings. Haas said Coinbase does not disclose client wallet addresses for security and privacy reasons, but emphasized that ETF issuers and custodial clients can independently verify their assets on the chain.
Haas said the storage business is “separately audited,” noting that Coinbase produces SOC 1 and SOC 2 reports that show controls are in place and working effectively.
Those checks include holding back on the blockchain and ensuring that assets are segregated by clients, including ETF issuers.
Haas said that each monitored customer can see their assets on the chain and knows the addresses associated with their assets. “We will never disclose the addresses we hold on behalf of clients,” he said, adding that Coinbase could explore tools that allow clients to disclose proof of stake themselves if they choose.
Coinbase management touches on the Transparency Act
Later in the call, Armstrong and Haas talked about regulatory developments regarding Coinbase’s stance on the proposed US crypto market structure law commonly referred to as the CLARITY Act.
Armstrong pushed back on claims that Coinbase had withdrawn its support for the bill, saying the company opposes a draft it considers ineffective.
Coinbase has spent more than $100 million over several years fighting for regulatory clarity, Armstrong said, arguing that previous documents created agreements in traditional financial trading groups that could prevent crypto innovation.
He said discussions are ongoing and that lawmakers, regulators, and industry stakeholders are still involved.
Armstrong said the company expects the market structure bill to pass and said legal clarification would provide long-term certainty without changing leadership at agencies like the SEC. If the law ends, he said Coinbase will continue to operate under existing laws while seeking clarification from regulators or the courts.
“I think the bill will pass,” Armstrong said. “It’s in everybody’s interest right now.”
