Brian Armstrong breaks his silence. The Coinbase CEO addressed the rumors swirling on social media regarding Bitcoin ETFs during an AMA session. He refused to let accusations of “paper Bitcoin” go unanswered.
James Seyffart from Bloomberg asked the tough question. Armstrong then revealed a striking figure: Coinbase controls more than 80% of Bitcoin ETF custody in the United States. It’s a dominant position that the CEO fully embraces. “We have a fairly dominant market share in terms of custody for ETFs. I see that as a strength,” he stated bluntly. For him, it’s a huge competitive advantage. Coinbase has established itself as the trusted counterpart on the institutional side, and Armstrong intends to maintain this lead. However, this concentration raises eyebrows.
Too Many Risks?
Armstrong acknowledges that this concentration raises legitimate questions. Large ETFs often diversify their custodians as assets grow. As a result, competitors have gradually chipped away at some market share. But according to him, there’s no need to panic.
Security is the key battleground for Coinbase. Armstrong detailed the arsenal deployed: regularly tested cold storage systems, repeated audits, and patents on custody technology. The company employs cryptographers to bolster defenses against attacks. And that’s not all. Leading financial institutions and government clients conduct their own checks. Double security, double control.
On Twitter and Reddit, the chatter is intense. Some claim that Bitcoin ETFs are not truly backed by real Bitcoin. Armstrong admits he doesn’t understand where these rumors come from. “Spot Bitcoin ETFs must be fully backed by the underlying asset,” he reminds. End of story.
Alesia Haas, the CFO, dives into the heart of the matter. Critics often demand a public “proof of reserves.” Like disclosing on-chain wallet addresses linked to ETF holdings. But Coinbase refuses to play along. “We would never disclose the addresses we hold on behalf of clients,” Haas asserts. It’s a matter of security and confidentiality. However, ETF issuers and custody clients can verify their assets on the blockchain on their own. This follows earlier reporting on Corporations Buy Bitcoin Aggressively Despite Major.
Haas emphasizes external audits. The custody sector undergoes separate scrutiny. Coinbase produces SOC 1 and SOC 2 reports showing that controls are working well. These audits verify that holdings match the blockchain and confirm that assets are separated by clients, including ETF issuers.
Each custody client sees their on-chain assets and knows the addresses linked to their holdings. Coinbase might explore tools for clients to disclose proof of reserves themselves if they wish. It remains to be seen if this will appease critics.
The discussion shifts to the CLARITY Act. Armstrong refutes rumors that Coinbase has withdrawn its support for the bill. “I think the bill will materialize. It’s in everyone’s interest at this point,” he says. The company only opposes a specific proposal it finds unworkable.
Negotiations continue between lawmakers, regulators, and industry players. Armstrong expects a market structure bill to be passed. Statutory clarity would provide long-term certainty, beyond the changing directions of agencies like the SEC. If legislation stalls, Coinbase will continue under existing rules while seeking clarifications through regulators or courts.
On February 17, 2026, Armstrong mentioned partnerships with several major banks. He refuses to name them specifically. But this institutional support strengthens Coinbase’s credibility as the primary custodian of Bitcoin ETFs, according to him. More on this topic: Binance Sees Bitcoin Surge While Ethereum.
Haas revealed that the company recently hired an independent audit firm to assess its security and compliance procedures. Results are expected in the coming months. This could offer more transparency on asset management under custody.
Armstrong also discussed Bitcoin’s volatility and its impact on ETFs. Despite price fluctuations, demand for Bitcoin ETFs remains strong. For him, this resilience proves that institutional investors see Bitcoin as a viable long-term asset class.
New ETF products could arrive this year. Armstrong mentioned it without giving a specific date. The ongoing expansion underscores Coinbase’s commitment to remain a leader in crypto innovation. Institutional traders seem convinced by the offering.
The Securities and Exchange Commission closely monitors this concentration. Gary Gensler had already expressed concerns about excessive centralization in the crypto ecosystem. BlackRock and Fidelity, the two giants behind the largest Bitcoin ETFs, are currently exploring alternatives to diversify their custody solutions. Several sources close to the matter indicate that discussions are underway with Bank of New York Mellon and State Street to spread the risks.
The issue goes beyond mere commercial competition. In the event of a major technical problem at Coinbase, nearly $900 billion in Bitcoin ETF assets could become temporarily inaccessible. This represents about 4.5% of the total global Bitcoin market capitalization. European regulators are closely watching the U.S. situation before finalizing their own crypto ETF rules. MiCA, the European regulatory framework, could include strict concentration limits to prevent this type of de facto monopoly.
Julie is a renowned crypto journalist with a passion for uncovering the latest trends in blockchain and cryptocurrency. With over a decade of experience, she has become a trusted voice in the industry, providing insightful analysis and in-depth reporting on groundbreaking developments. Julie's work has been featured in leading publications, solidifying her reputation as a leading expert in the field.
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