- The ban may be imposed due to non-compliance with new SEC rules
- The fund holds $5.4 billion in BTC and ETH on the exchange
- The funds have been on the exchange since 2019
The world’s largest asset manager Grayscale Investments fears that the SEC may ban use the Coinbase cryptocurrency exchange. The Grayscale Foundation holds $5.4 billion in BTC and ETH in the custodial arm of Coinbase.
Recently, the Securities and Exchange Commission proposed a rule that would make investment platforms responsible for the safe custody of client digital assets. The company’s CEO, Michael Sonnenschein, said such a rule could prevent Grayscale from using Coinbase to hold its funds.
On May 8, Michael sent a letter to the SEC in which he wrote that the new SEC rules would make it impossible for Grayscale to continue to store its BTC and ETH in the exchange’s custodial unit.
Grayscale currently holds $5.4 billion of cryptocurrencies on Coinbase. The fund controls the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE), which are the largest crypto funds of their kind. Both trusts hold about $2.7 billion in BTC and ETH.
All assets are held on the exchange through the Coinbase Custody Trust Company. The funds have been there since the 4th year already. The firm holds Grayscale’s assets in offline cold storage, at unique online addresses, and they are never mixed with funds from other clients.