Originally published on: September 12, 2024
Swiss asset manager 21Shares has announced a strategic move to enhance the custody services for its spot cryptocurrency exchange-traded funds (ETFs) by bringing on board two new custodians – Anchorage Digital Bank and BitGo. This development, revealed on Sept. 12, aims to fortify the security and risk management protocols for 21Shares’ popular United States-based spot crypto ETFs, which include the ARK 21Shares Bitcoin ETF (ARKB) and 21Shares Core Ethereum ETF (CETH).
Diversifying Custodial Partners for Enhanced Security
Highlighting the significance of this partnership, Andres Valencia, the head of investment management at 21Shares, emphasized the critical role of custody partners in bolstering the safety and security of their product lineup. By collaborating with Anchorage Digital Bank and BitGo alongside the existing custodian Coinbase, 21Shares is committed to elevating the level of protection and risk mitigation for its esteemed investors.
Expanding Custodial Frontiers in the US Crypto Market
As one of the pioneering spot crypto ETF issuers in the United States, 21Shares is at the forefront of diverging from the conventional practice of relying solely on Coinbase for custody services. Industry experts foresee a gradual shift towards a diversified custodian strategy among ETF issuers to minimize the risks associated with single-point failures in the custody framework, as highlighted by Nate Geraci, president of The ETF Store.
Rise of Regulated Digital Asset Custodians in the US
The surge in regulated digital asset custodians in the US market reflects a growing emphasis on aligning with stringent security and compliance measures. Notably, in August, Fireblocks secured approval from the New York Department of Financial Services to offer custody services for US clients, underscoring the trend of established players like Coinbase Custody Trust and Fidelity Digital Asset Services obtaining similar licenses.
Upholding Secure Crypto Storage Standards
Qualified crypto custodians adhere to strict security standards, including the utilization of cold-storage wallets and multiparty computation (MPC) for transaction authorization, aiming to safeguard depositors against exploit risks. The stringent oversight by regulatory bodies like the US Securities and Exchange Commission emphasizes the importance of maintaining adherence to custody rules to protect investor funds against potential vulnerabilities.
Anchorage Digital Bank’s Regulatory Endeavors
Anchorage Digital Bank, a federally chartered institution, is dedicated to offering fund issuers a secure and compliant pathway to leverage cryptocurrencies through a regulated ETP wrapper. Nathan McCauley, CEO of Anchorage Digital Bank, highlighted the bank’s commitment to fostering regulatory certainty and security for seamless crypto access for fund providers in the evolving digital asset landscape.
In Conclusion
The collaboration between 21Shares, Anchorage Digital Bank, and BitGo marks a transformative step in strengthening the security and custodial infrastructure for prominent US spot crypto ETFs, signaling a paradigm shift towards a diversified custodian model in line with the evolving regulatory landscape. This strategic alliance underscores a shared commitment to enhancing investor protection and operational resilience in the dynamic realm of digital asset investments.
