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Second After Coinbase: BitGo Becomes a Custodian For Valkyrie Bitcoin ETF

Valkyrie partners with BitGo to establish a double Bitcoin ETF custody

Valkyrie Investments has taken a significant step in bolstering the security and accessibility of its Bitcoin ETF offerings by bringing BitGo on board as a second custodian. This strategic move, announced on February 1, underscores Valkyrie's commitment to providing investors with secure and diversified options for Bitcoin investment. Mike Belshe, CEO of BitGo, expressed enthusiasm about the partnership, emphasizing the importance of private custody solutions in propelling the next wave of cryptocurrency adoption. 

He stated: 

“… [Valkyrie] took a new step forward with their newest ETF to help investors around the world get access to Bitcoin. It’s a privilege to be their custodian to support their product. We aim to demonstrate the value in private custody solutions to drive the next wave of adoption.”

This collaboration not only highlights BitGo's role in safeguarding digital assets but also reflects the advancing landscape of the ETF industry, where adherence to regulatory standards is paramount.

Valkyrie's strategic custodianship with BitGo and Coinbase

Valkyrie's approach to custodianship is both innovative and strategic. The partnership with BitGo is detailed in filings with the U.S. Securities and Exchange Commission (SEC), where BitGo's responsibilities extend beyond simple custody. They are tasked with the comprehensive management of digital assets and fiat currency, ensuring segregation of funds and providing advanced wallet software and API access exclusively for Valkyrie's use. This arrangement underscores the importance of specialized custody solutions in the increasingly complex world of cryptocurrency ETFs.

Simultaneously, Valkyrie's commitment to Coinbase as a custodial partner remains steadfast. An 8-K filing clarified that the new agreement with BitGo complements, rather than replaces, the existing arrangement with Coinbase. 

“The Trust’s existing custody arrangement with [Coinbase] is unaffected by the entry into the Agreement. The Sponsor anticipates utilizing the custodial services of both Coinbase and BitGo to custody the Trust’s bitcoin.”

This dual-custodianship model not only diversifies the security mechanisms for Valkyrie's Bitcoin ETF but also reflects a broader trend among ETF providers to enhance investor trust and regulatory compliance through multiple custodial relationships.

James Seyffart, a Bloomberg ETF analyst, views this development as a significant "diversification" in custodianship practices. Initially, most spot Bitcoin ETFs, including notable ones like BlackRock's iShares Bitcoin Trust, predominantly relied on a single custodian at launch. Valkyrie's decision to engage both BitGo and Coinbase marks a forward-thinking step in the ETF sector, providing a robust framework for the safeguarding of investors' assets.