Brian Armstrong, ETF Experts Shoot Down ‘Paper Bitcoin’ Rumors

As a seasoned analyst with over two decades of experience in the financial industry, I have learned to sift through the noise and focus on facts. The recent allegations against Coinbase, one of the most reputable players in the crypto space, were just another instance of baseless rumors that lack substantiation.

On Monday, claims that Coinbase (COIN) was distributing IOUs for Bitcoin to BlackRock were swiftly debunked by both industry authorities and the CEO of Coinbase, Brian Armstrong.

Over the weekend, renowned X crypto analyst Tyler Durden alleged that Coinbase permits BlackRock, the entity behind the largest spot Bitcoin exchange-traded fund, to acquire Bitcoin without offering security deposits. This supposedly enables manipulation of the market and capitalizing on subsequent price fluctuations.

In simpler terms, Sun stated that any legal order from the U.S. government has the power to take control of your Bitcoins. This situation vividly demonstrates how Bitcoin functions similarly to traditional central bank-issued currencies in certain aspects. Today is indeed a troubling day for Bitcoin enthusiasts.

Responding to all claims, Brian Armstrong from Coinbase clarified that the ETFs undergo a process where they’re created and destroyed, and these transactions get finalized within one business day. Moreover, institutional clients can utilize trade financing or over-the-counter options before the trades are officially completed.

Durden later deleted his tweet.

James Seyffart, an ETF analyst at Bloomberg, expressed his skepticism towards these rumors and conspiracy theories regarding ETFs, stating that they are yet another instance of misinformed opinions about ETFs,” is a possible paraphrase.

Seyffart emphasized once again that more financial institutions, like BlackRock, should make their digital wallet details accessible to the public, boosting transparency. Notably, Bitwise, a pioneer in crypto ETFs, has already disclosed its digital wallet addresses for both its bitcoin and ethereum funds. This move received praise from industry insiders.

Eric Balchunas, a senior ETF analyst at Bloomberg, chided the Bitcoin community for pointing fingers at ETFs for the current market sell-off, suggesting they should “take a good look in the mirror” instead.

In a post on X, he stated that those who invest in Bitcoin often distrust government entities and established institutions (which makes sense), but he emphasized that BlackRock is not to be underestimated. He warned that if Coinbase were found to be tampering with Bitcoin, the asset management giant could become very agitated.