The crypto landscape is witnessing a strategic alliance as Coinbase, the eminent cryptocurrency exchange, steps into the role of the official custodian for WisdomTree's spot Bitcoin ETF. This move, outlined in WisdomTree's recent filing, marks a significant shift in custody dynamics and sets the stage for an intriguing evolution in the crypto ETF race.
In a notable update to its S-1 filing, WisdomTree announced that Coinbase Custody Trust Company LLC would be the custodian for the Trust concerning its Bitcoin holdings. This decision diverges from the initial June filing, which named "U.S. Bank, National Association" as the custodian. The amendment reflects a strategic move aligning with Coinbase's prominence in the crypto custody arena.
WisdomTree joins the ranks of contenders who have tactically followed BlackRock's lead in structuring their funds and tailoring their applications to meet regulatory expectations. Coinbase emerges as a common thread, not only securing its position as the custodian for WisdomTree but also being chosen as the surveillance sharing partner by the Cboe BZX Exchange, where both BlackRock's and WisdomTree's funds are set to trade.
As the custodian, Coinbase shoulders the responsibility of safeguarding all Bitcoin owned by the Trust. This includes managing Bitcoin sent to WisdomTree's trust by authorized firms in exchange for shares. The crypto exchange will also facilitate Bitcoin sales upon the sponsor's request to cover sponsor fees or other Trust-related expenses and liabilities. Emphasizing security, the filing notes that Coinbase will store a substantial portion of the private keys associated with the Trust's Bitcoin in "cold storage" or similarly secure technology.
Notably, Coinbase stands out as the only publicly traded cryptocurrency exchange, subject to public audits by Deloitte, a big-four accounting firm. This not only enhances its credibility but also provides a sense of legitimacy in an industry often marred by scandals and opaque dealings.
Despite a legal tussle with the SEC in June for securities law violations, Coinbase's standing is bolstered by the SEC's acknowledgment that Bitcoin does not qualify as a security. This aligns with the agency's loss in the August lawsuit against Grayscale, hinting at a positive outlook for ETF approval. The SEC's upcoming deadline to decide on the WisdomTree Bitcoin Trust is January 15, setting the stage for a crucial turning point in the crypto ETF narrative.
Coinbase's pivotal role in safeguarding WisdomTree's Bitcoin ETF adds a layer of intrigue to the evolving landscape. As regulatory dynamics unfold, the industry watches with anticipation for the SEC's decision, poised to impact the trajectory of crypto ETFs and Coinbase's continued influence in shaping this narrative.
