Grayscale has selected Coinbase as the ETH custodian for its spot ETF

What’s new? Investment company Grayscale, which manages the largest spot bitcoin exchange-traded fund (ETF) GBTC, has supplemented its application to launch a similar Ethereum-based product. According to the updated documents, leading US crypto exchange Coinbase has been selected as the ETH custodian for the new fund.

Grayscale’s SEC filing

What else is known? Coinbase is the custodian of 90% of all assets held in spot bitcoin ETFs in the United States. Grayscale’s statement may indicate that the exchange will also be given the role of lead custodian for future Ethereum funds.

Some experts note the centralization risks associated with this. For example, the exchange is already the second-largest validator of the Ethereum blockchain. If Coinbase also becomes the leading ETF custodian, it will concentrate even larger volumes of the asset on its accounts.

It is not just Grayscale that has updated its documents. For example, BlackRock, the world’s largest investment company, which manages the second-largest spot bitcoin fund IBIT, has also supplemented its filing for the US Securities and Exchange Commission (SEC).

It states that the company raised an initial investment of $10 million for its new spot iShares Ethereum Trust by selling 400 000 of its shares at $25. In this way, the ETF raised seed money to launch trading on the stock exchange.

In addition to Grayscale and BlackRock, seven other companies are awaiting SEC approval to launch Ethereum funds: Fidelity, Franklin Templeton, ARK Invest and 21Shares, Invesco and Galaxy, as well as Bitwise.

Analysts have said the popularity of ETH ETFs is low compared to bitcoin products

They predicted that Ethereum funds would attract only 10-15% of the assets under management of bitcoin ETFs

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Last week, the SEC approved the stock exchanges’ Form 19b-4 filings to launch the funds. However, trading can only begin after the SEC approves Form S-1 filings from the issuers themselves. Advancement in the preparation of the necessary documents may indicate that this will happen in the coming weeks. That is the view of ETF Store president Nate Geraci.

An important aspect on the way to the launch of spot Ethereum funds has been the fact that issuers have removed the staking provision from their applications. Thus, investment companies will not be able to place assets purchased for the funds into staking, which allows them to receive rewards for participating in maintaining the network’s security.