Valkyrie, a pioneering force in the cryptocurrency exchange-traded fund (ETF) space, has made history by becoming the first spot Bitcoin ETF issuer to implement a dual custodial arrangement for its fund, striking a significant deal with BitGo.
In a move aimed at enhancing security and mitigating risk, BitGo will join forces with Valkyrie to provide custodial services for the Valkyrie Bitcoin Fund (BRRR). This partnership will involve safeguarding a portion of the underlying Bitcoin (BTC) within Valkyrie’s exchange-traded product. Although the agreement between Valkyrie and BitGo was finalized on January 17, formal filing with the U.S. Securities and Exchange Commission (SEC) occurred on February 1.
The strategic decision to diversify the custody of Valkyrie’s spot BTC ETF represents a proactive measure to spread risk across multiple crypto custodians, thereby reducing the vulnerability to single points of failure and fortifying the fund’s overall security. With competition heating up among asset managers, this innovative approach to custody management could potentially set a precedent, prompting other ETF issuers to follow suit.
Initially, Valkyrie boasted one of the highest fees in the industry, set at 0.8%. However, in a bid to align with market expectations and enhance competitiveness, the issuer recently adjusted its fee structure to a more competitive 0.25%, in collaboration with industry giants BlackRock and Fidelity. Despite this fee adjustment, Valkyrie’s Bitcoin ETF has yet to achieve trading volumes comparable to those of established Wall Street heavyweights.
In a related development, BlackRock recently made headlines by surpassing Grayscale’s GBTC in trading volume, marking a significant milestone in the ETF landscape. This achievement follows a substantial outflow of funds from Grayscale’s flagship fund over a two-week period, highlighting the evolving dynamics within the cryptocurrency investment space.
As Valkyrie continues to pave the way for innovation in the crypto ETF realm, its partnership with BitGo underscores a commitment to robust security measures and a strategic approach to navigating the evolving regulatory landscape surrounding digital assets.
