Asset manager 21Shares is adding Anchorage Digital Bank and BitGo as custodians for its spot cryptocurrency exchange-traded funds (ETF), according to a Sept. 12 announcement.
Anchorage Digital Bank and BitGo will join Coinbase, the existing custodian, in the custody of Bitcoin (BTC) and Ether (ETH) for 21Shares’ two United States spot crypto ETFs, ARK 21Shares Bitcoin ETF (ARKB) and 21Shares Core Ethereum ETF (CETH).
“We consider our custody partners to be crucial to the risk management […] of our product lineup, and diversification adds to the safety and security of our offering,” Andres Valencia, 21Shares’s head of investment management, said in a statement.
21Shares is among the first US spot crypto ETF issuers to expand its roster of custodians beyond Coinbase, the primary crypto custodian for virtually all US spot crypto ETFs.
“Think we’ll continue to see issuers diversify custodians in an attempt to minimize single point of failure risk,” Nate Geraci, president of The ETF Store, an investment adviser, said in a post on the X platform.
Digital asset custodians often seek a New York trust charter. Source: NYDFS
Regulated digital asset custodians are proliferating in the US. In August, Cointelegraph reported that Fireblocks — best known for its self-custodied treasury management products — obtained approval from New York’s financial regulator to custody assets for US clients.
Other institutional crypto companies — including Coinbase Custody Trust, Fidelity Digital Asset Services and PayPal Digital — are also similarly licensed.
Qualified crypto custodians adhere to strict standards for secure crypto storage — including cold-storage wallets and multiparty computation (MPC) for authorizing transactions — and generally insure depositors against exploit risk.
ARK 21Shares Bitcoin ETF holds almost $2.5 billion in BTC. Source: 21Shares
The US Securities and Exchange Commission (SEC) has been cracking down on investment managers who fail to adhere to the custody rule, which establishes guidelines for safeguarding investor funds.
In September, the SEC charged fund adviser Galois Capital Management with failing to properly custody client assets, including holding investor funds with the now-defunct cryptocurrency exchange FTX.
Anchorage Digital Bank — a federally chartered bank — aims to provide fund issuers with the “regulatory certainty and security profile they need to streamline access to crypto via a regulated ETP wrapper,” Nathan McCauley, Anchorage Digital Bank’s CEO, said in a statement.
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