21Shares bolsters crypto ETF security by adding new custodians in response to North Korean hacking threats.
Asset manager 21Shares has added Anchorage Digital Bank and BitGo as custodians for its spot crypto exchange-traded funds (ETFs) — the ARK 21Shares Bitcoin ETF (ARKB) and the 21Shares Core Ethereum ETF (CETH).
According to a statement on Sept. 12, Anchorage Digital Bank and BitGo will now join Coinbase, the current custodian, to strengthen 21Shares’ spot ETP operations in the U.S. The firm selected these custodians based on their strong records in regulatory compliance, security, and reliability.
With this move, BitGo now serves as custodian for four ETFs, working with other issuers like Hashdex and Valkyrie (now Coinshares).
Andres Valencia, head of investment management at 21Shares, highlighted the critical role of custody partners in risk management and operational excellence, noting that diversification enhances the safety and security of their products.
Anchorage Digital Bank co-founder and CEO Nathan McCauley emphasized that the firm’s federal charter — which overrides state-by-state regulation and qualifies it as an asset custodian — made it a natural fit for expanding ETP custody.
BitGo CEO Mike Belshe also commented:
“BitGo is proud to offer 100% cold storage as the leading independent custodian, serving the industry for over a decade as a trusted partner, and now for ETF issuers too.”
Addressing ‘Single Point of Failure’
21Shares’ decision to broaden its custodial partners follows the FBI’s recent warning of North Korea-linked hackers targeting crypto ETFs.
This development has drawn attention to Coinbase’s dominance in ETF custodial services, prompting a push for diversification. Coinbase currently serves as the custodian for eight of the 11 U.S. spot crypto ETFs.
Nate Geraci, president of The ETF Store, recently predicted that more issuers will likely diversify their custodians to minimize the risk of a single point of failure. Bloomberg senior ETF analyst Eric Balchunas echoed this view, noting that high fees charged by custodians compared to other asset classes may drive issuers to explore cheaper alternatives or use multiple custodians as leverage in fee negotiations.
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