Valkyrie Partners with BitGo for Bitcoin ETF Custodial Services
Valkyrie has become the first spot Bitcoin ETF issuer to collaborate with two separate crypto custodians, thanks to its partnership with BitGo. As part of the agreement, BitGo will provide custodial services for Valkyrie’s Bitcoin Fund (BRRR), safeguarding a portion of the underlying Bitcoin in the exchange-traded product. The deal was finalized on Jan. 17 and filed with the U.S. Securities and Exchange Commission (SEC) on Feb. 1.
Diversifying Risk and Enhancing Safety
This strategy allows Valkyrie to diversify its spot BTC ETF by spreading risk across multiple crypto custodians. This not only reduces single failure points but also strengthens the safety of the fund. With competition among asset managers increasing, it is possible that other issuers may follow suit in adopting similar approaches.
Competition and Fee Waivers in the Spot Bitcoin ETF Market
After the SEC approved spot Bitcoin ETFs on Jan. 10, issuers raced to attract market participants and investors. Fees became a major point of discussion, leading some issuers to offer fee waivers for up to six months. Initially, Valkyrie had one of the highest fees at 0.8%, but it later reduced the charge to 0.25% in collaboration with BlackRock and Fidelity.
Lower Trading Volume for Valkyrie Bitcoin ETF
Despite its fee reduction, the Valkyrie Bitcoin ETF has experienced lower trading volume compared to established players like BlackRock and Fidelity. In fact, BlackRock recently surpassed Grayscale’s GBTC as the top-performing fund following significant outflows from GBTC over a two-week period.
Hot Take: Valkyrie Sets a New Standard in Bitcoin ETF Custody
Valkyrie’s partnership with BitGo to leverage two separate crypto custodians sets a new standard in the Bitcoin ETF industry. By diversifying risk and enhancing safety, Valkyrie aims to attract investors looking for more secure investment options. With competition intensifying, it will be interesting to see if other issuers follow suit and adopt similar strategies. Additionally, the spotlight is on the Valkyrie Bitcoin ETF as it faces challenges in gaining significant trading volume compared to established players like BlackRock and Fidelity.
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