Valkyrie Adds BitGo as Custodian for its Spot Bitcoin ETF Offering

Bloomberg analyst James Seyffart said that it is possible for other ETF issuers to follow the example of Valkyrie and diversify custodians.

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Valkyrie, a leading asset management firm headquartered in Nashville, has announced that it has added BitGo, a digital asset trust company and security company based in California, as a second custodian for its spot Bitcoin (BTC) exchange-traded fund (ETF) offering. 

It is crucial to note that the United States Securities and Exchange Commission (SEC) approved eleven applications for spot Bitcoin ETFs submitted by asset management firms like BlackRock, Fidelity, and Valkyrie after delaying them throughout 2023.

Valkyrie Enters into Agreement with BitGo

As per an 8-K filing submitted with the US SEC on February 1, Valkyrie Bitcoin Fund and BitGo Trust Company had entered into a custodial services agreement on January 17, as per which the firm will provide services related to custody and safekeeping of the Bitcoin that would be in the asset management firm’s holdings.

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On the other hand, there are still plans to use Coinbase Trust Company as a custodian, but the asset management firm sought to diversify its digital asset custodians. 

“The Sponsor anticipates utilizing the custodial services of both Coinbase and BitGo to custody the Trust’s bitcoin,” the firm noted. 

BitGo is Now the Custodian for 2 ETFs

Notably, BitGo now acts as the custodian for two Bitcoin ETFs, the other being Hashdex. However, Coinbase still acts as the custodian for most of the asset management firms that provide spot BTC ETF offerings. 

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In a February 1 post on social media platform X, BitGo CEO Mike Belshe referred to custodian diversification as the “best approach” to reduce the risks associated with ETF custody. 

“This is a huge win for the industry,” he added while highlighting his firm’s deal with Valkyrie.

Other ETF Issuers to Follow Valkyrie?

As pointed out by Bloomberg ETF analyst James Seyffart, it is very much possible for other ETF issuers to follow the example of Valkyrie and add two or more custodians to their funds. 

“Wouldn’t be surprised to see some other funds do something similar,” said Seyffart.

While the trading of spot Bitcoin ETFs has been in full effect since early January, the Cboe stock exchange decided to withdraw the application for a proposed rule change it filed on behalf of Global X, a New York-based provider of ETFs, that would allow it to list a spot BTC ETF in the US.

BlackRock and Fidelity Leading the Way

As reported earlier, BlackRock, Fidelity, and Grayscale are leading the way when it comes to the trading volume of their respective spot BTC ETFs. 

Currently, BlackRock and Fidelity have $2.83 billion and $2.36 billion in Bitcoin holdings, respectively. 

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