Valkyrie Adds BitGo as Custodian for Spot Bitcoin ETF

Valkyrie Becomes First Bitcoin ETF Issuer to Diversify Custodians for Its Spot ETF

Valkyrie has enlisted BitGo as a second custodian for its Bitcoin ETF, dubbed the ‘BRRR’.

Asset management firm Valkyrie has chosen digital asset trust company BitGo as its custodian for its recently launched spot Bitcoin exchange-traded fund (ETF). This move aims to ensure the secure storage of the ETF’s Bitcoin holdings. In a filing to the United States Securities and Exchange Commission, Valkyrie stated that it had entered into a custodial services agreement with BitGo Trust Company. However, Valkyrie also plans to diversify its digital asset custodians by utilizing the services of Coinbase Trust Company.

The Importance of Custodian Diversification

Custodian diversification has become a critical consideration in the world of ETFs. BitGo CEO Mike Belshe emphasized the significance of this approach in a recent post, stating that it helps mitigate risks associated with ETF custody. By selecting both BitGo and Coinbase as custodians, Valkyrie is taking a proactive step towards safeguarding its Bitcoin holdings.

A Win for the Industry

BitGo’s appointment as the custodian for Valkyrie’s spot Bitcoin ETF is perceived as a significant victory for the industry. James Seyffart, an ETF analyst at Bloomberg, predicts that other ETF issuers may follow Valkyrie’s lead. This move showcases the growing recognition of BitGo’s credibility and expertise in the custodial services space.

Bitcoin Holdings and ETF Competition

According to data shared by BitMEX Research, the Valkyrie spot Bitcoin ETF, with the ticker “BRRR,” currently holds $113.5 million in Bitcoin. This makes it the seventh-largest Bitcoin holder among spot Bitcoin ETF issuers. In comparison, BlackRock and Fidelity lead the way, with $2.83 billion and $2.36 billion in Bitcoin holdings, respectively.

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The Battle of Management Fees

ETF issuers have been engaged in a fierce marketing and fee war in recent months. To gain a competitive advantage, Invesco, Galaxy, BlackRock, ARK 21Shares, and other issuers have decreased their management fees. Grayscale Investments, which has converted its Bitcoin trust into a spot ETF, currently charges the highest management fee at 1.5%. This ongoing battle underscores the importance of attracting investors and outperforming competitors in the highly competitive ETF market.

Q&A: What Readers Want to Know

Q: What are the benefits of diversifying custodians for a Bitcoin ETF?

A: Diversifying custodians for a Bitcoin ETF helps minimize the risks associated with custody. By working with multiple custodians like BitGo and Coinbase, Valkyrie ensures the security and safekeeping of its ETF’s Bitcoin holdings.

Q: How does Valkyrie’s Bitcoin ETF holdings compare to other issuers?

A: The Valkyrie spot Bitcoin ETF currently holds $113.5 million in Bitcoin, making it the seventh-largest Bitcoin holder among spot Bitcoin ETF issuers. BlackRock and Fidelity hold the largest Bitcoin holdings among new ETF issuers, with $2.83 billion and $2.36 billion, respectively.

Q: How is the battle of management fees impacting the ETF market?

A: ETF issuers are fiercely competing by lowering their management fees. Invesco, Galaxy, BlackRock, ARK 21Shares, and other issuers have reduced their fees to attract investors. Grayscale Investments currently charges the highest management fee at 1.5%.

For more information, you can check out these links: – Wall Street’s new asset class: Will Grayscale survive the Bitcoin ETF era? – Bitcoin ETF guru Eric Balchunas has the last laugh at doubters: X Hall of Flame – Bitcoin ETF fees play a critical role in the race for popularity – Spot Bitcoin ETF issuer Bitwise pledges 10% profits to fund open-source BTC development – BTC price pumps towards $45,000 as reporter claims SEC to approve multiple BTC ETF applications

In conclusion, Valkyrie’s decision to appoint BitGo as the custodian for its spot Bitcoin ETF demonstrates the industry’s recognition of BitGo’s expert custodial services. With custody being a critical concern, diversifying custodians helps minimize risks. The battle of management fees continues to shape the ETF market, as issuers strive to attract investors through competitive pricing. Moving forward, it will be interesting to see how this narrative unfolds in the increasingly competitive world of ETFs.

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