The U.S. Securities and Exchange Commission (SEC) is seeking public comment on a proposal by Cboe BZX Exchange to add new custody for bitcoin and ethereum exchange-traded funds (ETFs). The plan aims to increase security by adding Anchorage Digital Bank and Bitgo alongside Coinbase as custodians for bitcoin and ether holdings.
SEC Considers Proposal for New Custodian for 21 Bitcoin and Ether ETFs
The U.S. Securities and Exchange Commission (SEC) published a notice on Wednesday requesting comment on a proposed rule change by the Cboe BZX Exchange. The proposal would amend the 21shares ARK Bitcoin exchange-traded fund (ETF) and the 21shares Core Ethereum ETF by adding two new custodians, Anchorage Digital Bank NA and Bitgo New York Trust Company LLC. These custodians would provide custody services for bitcoin and ether for the respective trusts.
Currently, Coinbase Trust Company LLC is the sole custodian for both ETFs. The SEC filing explains that Anchorage and Bitgo will also provide custody services, with assets held in segregated accounts to “clearly identify the bitcoin trust as the owner.” The filing further clarifies that these accounts will be separate from both the custodian’s assets and those of other customers. The securities regulator notes:
Each new Custodian will custody the Bitcoin Trust's bitcoins according to the custodianship agreement.
The proposal aims to mitigate the risks associated with third-party custody services by diversifying custody service providers, providing detailed information on records.
The SEC has not yet approved the rule change and is currently seeking comments from interested parties. While no new regulatory concerns were raised in the filing, the SEC noted that all other terms of the ETF remain unchanged. The public is encouraged to submit comments before the rule change goes into effect.
What do you think of the Cboe BZX Exchange’s proposal to diversify custodians for its bitcoin and ethereum ETFs? Let us know in the comments below.
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