Coinbase Custody Assets Grow as ETF Issuers Concentrate Sub-Custody

Coinbase's institutional custody business continues to hold coins for the vast majority of US spot Bitcoin exchange-traded funds. Issuer prospectuses show that BlackRock, Grayscale, Bitwise, Franklin Templeton and Invesco all rely on Coinbase Custody Trust Company for cold storage.

The concentration has drawn commentary from risk analysts and academics, who argue that a single point of failure in operational, cyber or legal terms would ripple through the entire spot ETF complex. Coinbase counters that its custody operation uses a segregated New York limited-purpose trust with SOC audits and insurance coverage.

Fidelity remains the largest issuer using in-house custody for its FBTC product, and some smaller issuers have begun exploring multi-custodian setups to reduce concentration.