Valkyrie Partners with BitGo for Custody Services in Its Spot Bitcoin ETF
Valkyrie, an asset management company, has partnered with BitGo, a digital asset trust company, to provide custodial services for its spot Bitcoin exchange-traded fund (ETF). This move was detailed in an SEC filing on February 1, stating that the agreement with BitGo was signed on January 17, allowing BitGo to handle the custody and safeguarding of Bitcoin holdings for the Valkyrie ETF.
Despite this new partnership, Valkyrie confirmed its ongoing relationship with Coinbase as another custodian, indicating a strategic move to diversify its custody services for digital assets.
Valkyrie’s decision to employ both Coinbase and BitGo for custodial services is seen as a diversification strategy to enhance the security and integrity of its Bitcoin ETF, named BRRR. BitGo’s appointment marks it as a custodian for two spots for Bitcoin ETF issuers, with Hashdex being the other. Coinbase, on the other hand, remains the primary custodian for most spot Bitcoin ETFs launched in January.
Mike Belshe, CEO of BitGo, hailed the diversification of custodians as the optimal strategy to minimize risks associated with ETF custody. He expressed his views on social media, stating, “This is a huge win for the industry.”
James Seyffart, an ETF analyst at Bloomberg, also weighed in, suggesting that Valkyrie’s move might set a precedent for other ETF issuers regarding custodian diversification.
As of January 31, Valkyrie’s spot Bitcoin ETF holds approximately $113.5 million in Bitcoin, ranking it seventh among spot Bitcoin ETF issuers in terms of Bitcoin holdings. The ETF market, especially for Bitcoin, has become highly competitive, with issuers engaging in marketing and fee reductions to attract investors.
Notably, Invesco and Galaxy recently reduced their management fees, joining other firms like BlackRock and ARK 21Shares, which had previously adjusted their fees. Grayscale Investments, which transitioned its Bitcoin trust to an ETF, maintains the highest management fee at 1.5%.
The launch of spot Bitcoin ETFs on January 11 followed the SEC’s approval, marking a significant development for the cryptocurrency market and investment landscape. This has sparked a competitive environment among issuers, with companies like Valkyrie taking steps to ensure the safety and growth of their digital asset offerings through strategic custodial partnerships.
