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Asset manager 21Shares has announced a strategic expansion of its custodians for its spot cryptocurrency exchange-traded funds (ETFs). In a move revealed on September 12, 21Shares will add Anchorage Digital Bank and BitGo as custodians alongside the existing custodian, Coinbase. This diversification is aimed at enhancing the security and risk management of its offerings.
21Shares' two U.S. spot crypto ETFs, the ARK 21Shares {Bitcoin} (BTC) ETF (ARKB) and the 21Shares Core {Ethereum} (ETH) (CETH), will now be secured by Anchorage and BitGo. “We consider our custody partners to be crucial to the risk management of our product lineup,” said Andres Valencia, Head of Investment Management at 21Shares. “Diversification adds to the safety and security of our offering.”
This decision marks a significant shift in the U.S. spot crypto ETF market, where Coinbase has historically been the dominant custodian. The move reflects a broader trend of issuers seeking to mitigate risk by reducing reliance on a single custodian. Nate Geraci, President of The ETF Store, noted, “We’ll continue to see issuers diversify custodians in an attempt to minimize single point of failure risk.”
The addition of Anchorage Digital Bank and BitGo to the custodianship roster comes as U.S. regulatory scrutiny intensifies. Recent actions by the U.S. Securities and Exchange Commission (SEC) highlight the importance of adhering to custody rules, particularly following enforcement actions against firms that failed to properly safeguard investor assets.
Anchorage Digital Bank, a federally chartered institution, aims to offer regulatory certainty and a robust security profile for fund issuers. Nathan McCauley, CEO of Anchorage, emphasized that the bank's role is to streamline access to crypto through a regulated exchange-traded product (ETP) wrapper.
The landscape of digital asset custodians in the U.S. continues to evolve with notable players like Fireblocks, which recently received approval from New York's financial regulator for crypto custody. Other significant custodians include Coinbase Custody Trust, Fidelity Digital Asset Services, and PayPal Digital.
As the crypto space matures, the inclusion of multiple custodians in the management of digital assets is expected to become more commonplace, enhancing overall security and trust in the sector.
