BlackRock Bitcoin ETF requires 12-hour BTC withdrawals

The recent development in BTC withdrawals has captured the attention of crypto users. BlackRock submitted an essential amendment to its physically-backed Bitcoin ETF.

The new amendment is that Bitcoin withdrawals must be processed within 12 hours. Continue reading to understand what this means for everyone.

What’s the Big Deal?

On September 16th, BlackRock filed form amendment S-8 with the United States Securities and Exchange Commission (SEC). With this amendment, Coinbase, the custodian, must complete the transaction within 12 hours when an investor asks to withdraw Bitcoin from the ETF.

This was after some investors expressed concerns about how Coinbase handles the Bitcoin it holds for these ETFs. There was increasing concern that Coinbase could trade in ‘paper BTC,’ or IOUs, instead of the real Bitcoin. This increased doubts about the authenticity of Bitcoin and, thus, its price. However, BlackRock seeks to calm the investors, telling them they can redeem Bitcoins on the blockchain within a given time.

What Did Coinbase Say?

Coinbase is the corresponding custody for many Bitcoin and Ether ETFs in the U.S. Brian Armstrong, Coinbase’s CEO, stated that they process all transactions on the blockchain. He said investors should since nobody will try to mess with their bitcoins. Armstrong also emphasized that Coinbase is a publicly traded company. He clarified that the Bitcoin for these ETFs is real and accounted for. Also, the company doesn’t reveal all the addresses holding these Bitcoins for security reasons.

What Prompted the Concern?

These investor worries intensified when Coinbase mentioned it might be developing a new product. This product will be “Coinbase BTC” or cbBTC, a form of Wrapped Bitcoin (wBTC). Wrapped Bitcoin is a valuable token on different blockchains. It raised questions about whether Coinbase had enough actual Bitcoin to back all the ETFs.

Bitcoin prices have been stagnant for months, which some thought could be due to Coinbase holding onto Bitcoin in ways that didn’t reflect its market value.

Are Bitcoin ETFs to Blame for the Price Slump?

To curb this perception, some analysts like Eric Balchunas from Bloomberg have attempted to explain this. He also excluded BlackRock or other ETF issuers from blaming for the recent falling Bitcoin price.

Instead, it seems that holders of native Bitcoin have been cashing out in the long term. If that’s the case, massive sales contribute to the price drop. ETFs keep Bitcoin’s price from falling even further, with data showing that ETFs now hold billions as on-chain Bitcoin.

Conclusion

The new amendment wants to process Bitcoin withdrawals in 12-hour batches. This is to restore investors’ losses and bring transparency. These concerns raised some eyebrows about Coinbase’s practices, but they and BlackRock gave investors a thumbs up.

Disclaimer

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.