June 24, 2024
Valkyrie's 'BRRR' Bitcoin ETF Bolsters Security with BitGo as Second Custodian
Bitcoin ETF

Valkyrie’s ‘BRRR’ Bitcoin ETF Bolsters Security with BitGo as Second Custodian

Valkyrie, the asset management firm, has entered into a strategic partnership with BitGo, a digital asset trust company, to serve as a custodian for its newly launched spot Bitcoin exchange-traded fund (ETF). This move marks a significant development in the rapidly evolving landscape of digital asset management.

According to an 8-K filing submitted to the United States Securities and Exchange Commission (SEC) on Feb. 1, Valkyrie disclosed that the Valkyrie Bitcoin Fund and BitGo finalized a custodial services agreement on Jan. 17. Under this agreement, BitGo will assume responsibilities related to the custody and safekeeping of Bitcoin holdings within the Valkyrie ETF.

While Valkyrie affirmed its intention to continue using Coinbase as a custodian, it aims to diversify its custodial arrangements by engaging with BitGo. The firm highlighted its plan to leverage the custodial services of both Coinbase and BitGo for the custody of the Trust’s bitcoin holdings, emphasizing the importance of risk mitigation in ETF custody.

BitGo CEO Mike Belshe emphasized the significance of custodian diversification as a prudent risk management strategy, stating, “This is a huge win for the industry.” He reiterated the importance of adopting a diversified approach to ETF custody to address associated risks effectively.

Bloomberg ETF analyst James Seyffart expressed his expectation that other ETF issuers may follow Valkyrie’s lead in diversifying their custodial arrangements, reflecting the growing recognition of the importance of risk mitigation in the ETF space.

The Valkyrie spot Bitcoin ETF, trading under the ticker symbol BRRR, currently holds $113.5 million in Bitcoin, positioning it as the seventh-largest Bitcoin holder among spot Bitcoin ETF issuers, based on data shared by BitMEX Research as of Jan. 31.

In the competitive landscape of spot Bitcoin ETFs, Valkyrie’s move underscores the ongoing marketing and fee wars among issuers. Notably, Invesco, Galaxy, BlackRock, ARK 21Shares, and others have recently adjusted their management fees to remain competitive in the market.

Among the new Bitcoin ETF issuers, BlackRock and Fidelity lead the way with significant Bitcoin holdings of $2.83 billion and $2.36 billion, respectively.

The launch of spot Bitcoin ETFs on Jan. 11, following SEC approval on Jan. 10, has reshaped the landscape of digital asset investment, providing investors with new avenues for exposure to Bitcoin within the regulated framework of ETFs.

As Valkyrie pioneers custodial diversification in the ETF space, the industry anticipates further innovations and strategic partnerships to enhance risk management practices and drive the adoption of digital assets in mainstream investment portfolios.

Image: Wallpaper Flare

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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