In a significant development in the cryptocurrency space, Valkyrie Partners With Bitgo. Valkyrie Digital Assets, a prominent cryptocurrency asset manager, disclosed on February 1, 2024, that it has selected Bitgo to provide custodial services for its spot bitcoin exchange-traded fund (ETF). The revelation was made through a Form 8-K submission to the U.S. Securities and Exchange Commission (SEC).
Bitgo to Safeguard Valkyrie’s Bitcoin Assets
In today’s groundbreaking news, we hear that Valkyrie Partners With Bitgo. Valkyrie, now under the ownership of Coinshares, unveiled that Bitgo will take on the crucial role of “custody and safekeeping of the Trust’s bitcoin holdings.” This implies that Bitgo will oversee the funds associated with Valkyrie’s spot bitcoin ETF. Valkyrie, based in Nashville, was part of the new wave of spot bitcoin ETFs that recently launched alongside the revamped bitcoin trust managed by Grayscale.
BitGo CEO Mike Belshe emphasized the significance of custodian diversification as the “best approach” to mitigate risks associated with ETF custody. Belshe called the partnership with Valkyrie a “huge win for the industry,” reflecting a positive sentiment toward the strategic move.
Industry analysts, including Bloomberg ETF analyst James Seyffart, suggest that Valkyrie’s decision to incorporate multiple custodians might set a trend for other ETF issuers. Seyffart notes the possibility of witnessing similar moves by other funds seeking to enhance custodial security.
While spot Bitcoin ETF trading has been active since early January, the Cboe stock exchange withdrew the application for a proposed rule change filed on behalf of Global X, a New York-based ETF provider, aiming to list a spot BTC ETF in the US.
Insurance Policy Requirements for Added Security
As part of the custodial agreement concerning Valkyrie Partners With Bitgo, Bitgo is required to maintain an insurance policy. This policy aims to provide coverage against various risks, including duplication and theft of private keys, internal theft or fraudulent acts by Bitgo’s staff or executives, as well as the loss of keys and asset theft related to Bitgo’s key custody responsibilities. Despite this new partnership, the Form 8-K filing signed by Valkyrie’s CEO Leah Wald specifies that Coinbase Trust Company will continue to serve as the custodian.
Valkyrie’s Recent Spot Bitcoin ETF Launch
Valkyrie’s move comes on the heels of the launch of its spot bitcoin ETF named BRRR on January 11, 2024. Leah Wald expressed that this launch marked “just the beginning of a new wave,” emphasizing that the groundwork for BRRR had been laid over the past three years. As of the latest reporting, Valkyrie’s website indicates that the BRRR fund currently holds 2,649.46 BTC, valued at approximately $114 million.
Changing Custodial Landscape in Bitcoin ETFs
Presently, Coinbase Trust Company serves as the custodian for seven out of the ten spot bitcoin ETFs. These include prominent names such as Grayscale, Blackrock, Ark Invest, Bitwise, Invesco, Franklin Templeton, and Wisdomtree. Fidelity independently manages its BTC, while Vaneck’s HODL funds are secured with Gemini. Valkyrie’s decision to partner with Bitgo introduces a new player into this competitive landscape.
A Bold Step Forward for Bitcoin ETFs
Valkyrie’s strategic move to collaborate with Bitgo for custodial services marks a notable shift in the rapidly evolving landscape of Bitcoin ETFs. This decision, coupled with the insurance measures in place, emphasizes the industry’s commitment to securing digital assets and fostering investor confidence. As Valkyrie’s BRRR fund gains traction, the broader distribution of BTC across various ETFs, including the established GBTC, signals a new era for cryptocurrency investment opportunities. Investors and enthusiasts alike will undoubtedly be watching as these developments unfold in the dynamic world of digital assets.
Also Read: Polygon Labs layoff 19% staff: Implements Workforce Reduction for Strategic Alignment.
