Valkyrie, the asset manager, has chosen BitGo, a digital asset trust, as the custodian for its recently launched spot Bitcoin exchange-traded fund (ETF). According to an 8-K filing with the U.S. Securities and Exchange Commission (SEC) on February 1, the Valkyrie Bitcoin Fund signed a custody services agreement with BitGo on January 17. This agreement involves BitGo providing services related to the custody and safekeeping of the holdings of the Valkyrie ETF Bitcoin. Despite this, Valkyrie plans to utilize Coinbase as a custodian as well, indicating a strategy to diversify its digital asset custodians.
Valkyrie stated that it expects to use the custody services of both Coinbase and BitGo for the storage of the trust's bitcoins. Notably, BitGo is now the custodian for two spot Bitcoin ETF issuers, the other being Hashdex. In contrast, Coinbase serves as the custodian for most spot Bitcoin ETFs launched in January. Mike Belshe, the CEO of BitGo, emphasized the importance of custody diversification as the "best way" to mitigate risks associated with ETF custody, considering Valkyrie's decision. Bloomberg ETF analyst James Seyffart expressed that other ETF issuers might follow Valkyrie's lead in diversifying their custodians.
The Valkyrie Spot Bitcoin ETF (ticker BRRR) held approximately $113.5 million worth of Bitcoin, making it the seventh-largest Bitcoin holder among spot Bitcoin ETF issuers, as of January 31. BlackRock and Fidelity are leading among new Bitcoin ETF issuers, holding $2.83 billion and $2.36 billion in Bitcoin, respectively. The competition among spot Bitcoin ETF issuers has led to a marketing and fee war, with Invesco and Galaxy lowering their management fees from 0.39% to 0.25% on January 29. Other issuers, such as BlackRock, ARK 21Shares, and Grayscale Investments, have also adjusted their management fees ahead of the final approval of their spot Bitcoin ETFs. Grayscale Investments is converting its Bitcoin Trust into a spot ETF format and currently has the highest management fee at 1.5%. The spot Bitcoin ETFs were launched on January 11 following SEC approval on January 10.
