BlackRock Modifies Coinbase Custody Agreement to Require 12-Hour Withdrawals
BlackRock has amended its custodial agreement with Coinbase to update the operating procedures for its iShares Bitcoin Trust ETF. According to a Sept. 16 filing with the U.S. Securities and Exchange Commission, the revisions to Coinbase's prime broker agreement introduce changes designed to improve the withdrawal process and asset management during unsettled trades. The modifications shorten the time it takes Coinbase Custody to process withdrawals from Vault Balance to a public blockchain address (while the trade credit is outstanding). The protocol also allows trusts to make withdrawals from Vault Balance or Trading Balance to a public blockchain address, provided that an amount equal to the unpaid Trade Credit remains in the total balance after the withdrawal. The amendment updates Section 2.1 of the Custody Services Agreement, as described in the SEC filing.Coinbase Custody must now process withdrawals of digital assets to a public blockchain address within 12 hours of receiving instructions from the Trust or its authorized representative, subject to certain balance requirements. The development comes amid recent allegations against Coinbase that the exchange did not use BlackRock funds to purchase actual bitcoins for the ETF. Social media rumors claimed that Coinbase was issuing debt letters instead of backing the ETF with bitcoin and using BlackRock funds to manipulate the price of bitcoin. These contract updates may also address regulatory expectations and best operational practices focused on reducing withdrawal processing times and ensuring asset availability during unsettled transactions.
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