Coinbase custodies 9 of 11 Bitcoin ETFs and 8 of 9 Ethereum ETFs, representing roughly $74 billion. Bitwise flags concentration risk from single-custodian reliance.
Coinbase custodies assets for 9 of the 11 spot Bitcoin ETFs and 8 of the 9 spot Ethereum ETFs, according to Bitwise. The exchange holds roughly $74 billion of the $91.7 billion in Bitcoin ETF assets under management, the asset manager said.
Coinbase has been storing crypto assets for institutions for more than 12 years. When the SEC approved spot Bitcoin ETFs in January 2024, issuers needed a custodian with regulatory experience and secure infrastructure. Coinbase was the natural choice for most.
BlackRock's IBIT, the largest spot Bitcoin ETF by assets, routes its BTC and ETH deposits through Coinbase Prime. The world's biggest asset manager, with more than $10 trillion in total AUM across all products, chose the same custodian as nearly every other issuer in the space.
Not every issuer is fully reliant on Coinbase. Fidelity's FBTC uses Fidelity Digital Assets as its custodian; Fidelity has been developing its crypto custody since 2018. VanEck's HODL has engaged Gemini alongside Coinbase. BlackRock's IBIT has also brought Anchorage Digital into the mix.
Still, most ETF assets flow through a single provider. If Coinbase experienced a significant disruption, the impact would not be limited to one ETF. It would potentially affect 9 of the 11 Bitcoin ETFs at once. Buying multiple Bitcoin ETFs from different issuers would not diversify custodial exposure in most cases, Bitwise noted.
The competitive landscape for crypto custody is slowly expanding. Anchorage Digital holds a federal bank charter. Fidelity Digital Assets has the backing of one of the largest financial services firms. But winning ETF custody mandates requires years of operational history. Most competitors are still building that track record.
For Coinbase, the dominance generates substantial revenue and strengthens the company's role as critical infrastructure for the US crypto market. Custody fees are typically measured in basis points, and at $74 billion-plus, even a modest fee rate produces meaningful income, Bitwise said.
On the other side, the concentration of assets invites regulatory scrutiny. Bitwise warned that adding “systemically important crypto custodian” to Coinbase's regulatory profile could accelerate discussions about capital reserves and potential designation as a systemically important financial market utility.
Roughly $74 billion in Bitcoin ETF assets sit with a single custodian, Bitwise said.
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