On-chain analytics firm Arkham Intelligence has identified four addresses for Bitcoin (BTC) exchange-traded products (ETPs). This latest discovery brings the number of Exchange Traded Fund (ETF) providers whose BTC addresses are known to five.
Arkham Intelligence has identified the addresses of products offered by BlackRock, Bitwise, Fidelity and Franklin Templeton.
BTC ETF providers may be fearful of public exposure
The data shows that Fidelity holds $1.21 billion in BTC in the Fidelity Wise Origin Bitcoin Fund at custodian Fidelity Digital Asset Services LLC. BlackRock, Bitwise, and Franklin Templeton hold $1.16 billion, $422.68 million, and $47.09 million worth of BTC on the Coinbase Prime Custody platform.
Coinbase is the custodian for eight of the eleven Bitcoin ETFs, which some call concentration risk. A custodian holds the private keys that allow address owners to transfer their BTC. Gemini, the crypto exchange founded by Cameron and Tyler Winklevoss, is the custodian of the VanEck Bitcoin Trust.
Read more: What is a Bitcoin ETF?
In February last year, the US Securities and Exchange Commission proposed new rules for crypto custodians. The plan is to introduce these rules later this year.
Bitcoin ETF on-chain data | Source: Arkham Intelligence
The concentration of billions of dollars worth of cryptocurrencies can lead to a single point of failure. A cybersecurity breach or legal risks can put customers' funds at risk. A hack of the Coinbase database can reveal transfers that institutions may not want to make public.
CoinMetrics, an analytics firm co-founded by crypto venture capitalist Nic Carter, said it is important that new research methods emerge as Bitcoin evolves. The company said in a recent on-chain analysis blog post:
“As Bitcoin evolves and matures, the need to research it critically also grows.”
Read more: How to value cryptocurrencies with on-chain and fundamental analysis
Coinbase recently announced that it had received over 12,000 law enforcement inquiries related to criminal cases in 2023. The exchange is currently embroiled in a protracted court battle over the securities status of several crypto assets.
Impact of US Bitcoin ETFs noticeable in Europe
The launch of US Bitcoin ETFs earlier this month caused European and Canadian funds to lose around 5,000 BTC. As a result, exchange traded product (ETP) providers in Europe, Invesco and WisdomTree, have reduced their fees by up to 60%. Fees on WisdomTree's physical Bitcoin ETP fell from 0.95% to 0.35%, while Invesco reduced fees on its physical Bitcoin ETP from 0.99% to 0.39% of assets under management.
European and Canadian Bitcoin ETFs were among the only regulated institutional Bitcoin products before their US counterparts went live. 21Shares, ARK Invest's US Bitcoin ETF partner, is a leading ETF provider in Europe.
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