At what dollar amount does the banking cartel start asking tough questions like “Who holds the bag?” and “Who holds our coins?” As we get closer to ETF approval, I can't help but wonder to myself, “Who's holding the bags?” And while it seems like everyone on Twitter is ETF experts and breaking news about app punctuation changes, Coinbase has quietly positioned itself in one of the most important roles in the future of fiat bitcoin. Coinbase is now listed as custodian on 9 of the 12 Bitcoin Spot ETF apps. Read that again.
List of Bitcoin Spot ETF Trustees
Source: Bloomberg Intelligence, Securities and Exchange Commission
With her role in these ETFs collateralized by Coinbase, it makes you wonder what's going on behind the scenes. Less than 10 days ago, Coinbase made a notable change in leadership by getting rid of its chief custodian, Aaron Schnarch, and bringing in 30-year Wall Street veteran Rick Schoenberg.1 To drive business. So let me get this straight, two weeks before the ETF approval, Coinbase owns 75% of the custodian roles in all of Spot Bitcoin's ETF business in the US, and they fired their head of custodian and replaced him with the most famous guy ever. Call me crazy but that's how the New York banking cartel works. Do you think strangers are welcome? You'd think the New York banking cartel would simply bend the knee to the gray Bay Area2?
Besides the idea of some suspicious dealings with the New York banking cartel, Coinbase is worth some scrutiny, especially if you're interested.3 About the risks of foster care. Custody risk is associated with entrusting a third party, often known as a custodian, with the custody and management of financial assets.
Nursery risks. The risks associated with entrusting the custody and management of financial assets to a third party, often known as a custodian.
This risk can take different forms:
- Operational Risk: The risk of loss resulting from custodian operational failures, such as administrative errors, technology failure, process disruption, and loss of keys.
- Fraud risk: The risk that the custodian will engage in fraudulent activities, such as misappropriation of assets or tampering with records.
- Credit risk: The risks that may lead to the custodian’s insolvency or inability to fulfill its obligations, which may lead to the loss of assets.
- Legal and Regulatory Risk: The risk of loss resulting from non-compliance with laws and regulations, which may result in fines, penalties or legal action.
- Counterparty risk: In cases where a trustee enters into transactions with other parties on behalf of a client, there is a risk that the counterparty may default or fail to fulfill its obligations.
- Security risks: The risk of theft or loss of assets due to weak security measures, both physical and digital.
When I look at this list, I put a mental check mark next to each item as a legitimate hold risk since 75% of Bitcoin ETFs pass through Coinbase's hands. Now look, I'm not writing this to make you anxious. I'm just saying that the change in leadership is very strange, and concentrating money in one trustee is a major red flag. If anything this situation makes a Bitcoin 6102 scenario more likely.
Developments surrounding Coinbase's role as custodian of nine out of twelve Bitcoin Spot ETF applications raise significant concerns about custody risk. With over 75% of the market share under Coinbase's control, investors should carefully consider the potential risks associated with relying on a single entity to store and manage their fiat Bitcoin reserves. The convenience of centralized guarding services may seem attractive, but the risks cannot be ignored. It is important for individuals to conduct their own research and understand the implications of custodial arrangements before investing in any Bitcoin ETF. By doing so, they can make informed decisions and reduce exposure to threats posed by 6102 Bitcoin, regulatory seizures, cyber attacks, and other unexpected events. Eventually, the ETF will get approved, things will get really weird, the New York banking cartel will sink its teeth into Bitcoin, and then there are Brian's big bags.
Footnotes
- This guy's resume is pretty spot on for this role, just take a look if you want to get schizophrenic about this stuff. The point I want to make is that they brought in a lover to do the job. ↩︎
- The term “Grays” was coined (as far as I know) by Balaji last year when he participated in an epic 3-hour podcast with Marty, but the idea of the Grays is that the country is divided into blue and red political tribes, but there is a third tribe he calls the Grays who have no allegiance to either. From both sides. The Grays are capitalist builders who just want to build. ↩︎
- I don't really care about this product because I'm not a customer, I'm just noticing the elephant in the room. Not your keys or your coins. ↩︎
