Crypto spot exchange-traded funds have a new custodian: Anchorage Digital.
It’s good news for investors, too.
So far, spot Bitcoin and Ethereum ETFs in the US have mostly used crypto exchange Coinbase as a custodian — with the exception of Fidelity, which self-custodies, and VanEck, which uses Gemini.
Concentration around one custodian can be risky, Kinga Bosse, chief operating officer at crypto infrastructure firm MPCH, told DL News in May.
“In the traditional finance system, it’s not like the custody market is completely decentralised, but they have large, long-standing organisations that take care of it,” Bosse said.
The federally chartered crypto bank announced today it will provide custody services for ARK Invest and 21Shares’ spot Bitcoin ETF, ARKB, as well as for 21Shares’ spot Ethereum ETF, CETH.
Having accumulated $3 billion in assets since it launched on January 11, ARKB is the third most successful Bitcoin ETF of the year, behind BlackRock’s and Fidelity’s, and the fourth biggest ETF if you include Grayscale’s GBTC.
CETH, meanwhile, has vacuumed up $9 million since its July 23 launch, making it the smallest Ethereum fund at the moment.
A $60bn industry
A former global head of strategic investments and partnerships at banking giant State Street, Bosse said that Coinbase was taking on “a lot of liability” by custodying 80% of the $60 billion spot crypto ETF market.
“I don’t think even Coinbase would disagree that risk needs to be diversified,” Bosse added.
“This is not a monopoly game. It’s not Google grabbing market share. We’re talking about security, people’s money, and liability. That should be shared.”
Tom Carreras writes about markets for DL News. Got a tip about Bitcoin ETFs and custody solutions? Reach out at tcarreras@dlnews.com