Debunking the Controversy: Coinbase, BlackRock, and the Bitcoin ETF

Recently, a controversy emerged in the cryptocurrency community surrounding Coinbase’s alleged BTC borrowing privileges to BlackRock, the world’s largest asset manager and spot ETF issuer, through cbBTC. This led to speculation that the move would put downward pressure on asset prices.

However, Eric Balchunas, Bloomberg senior ETF analyst, countered this claim on X (formerly Twitter), stating, “People want to find the reason for Bitcoin’s weakness in the opacity of ETFs. It is inconceivable to them that native HODLers (long-term holders) can become sellers. But this is actually happening. All the ETF and BlackRock have done is repeatedly pull the price of Bitcoin up from the bottom.”

Nate Geraci, CEO of ETF Store, a US ETF specialist, also weighed in on the issue, saying, “It is true that Coinbase owns BTC, the underlying asset of the physical ETF, on a 1:1 basis.” He further noted that a similar conspiracy theory was raised when the gold physical ETF was launched, and that “people who repeat such claims do not understand how ETFs work.”

These statements aim to provide clarity on the situation and dispel misconceptions surrounding the relationship between Coinbase, BlackRock, and the Bitcoin ETF.