Crypto Bank Anchorage Digital Challenges Coinbase's ETF Custody Dominance

Anchorage Digital Bank has secured a role as custodian for the ARK 21Shares Bitcoin ETF ARKB, challenging Coinbase‘s COIN dominance in the cryptocurrency ETF custody market.

What Happened: The development marks a notable shift in an industry where Coinbase has been the primary custodian for most U.S. Bitcoin ETFs since their approval in January 2024.

21Shares US LLC, a major issuer of crypto exchange-traded products (ETPs), revealed that it has appointed Anchorage Digital Bank N.A. and BitGo as additional custodians for its US spot ETPs.

This decision expands 21Shares’ custody partnerships beyond Coinbase, potentially reshaping the competitive landscape in crypto asset custody for regulated investment products.

Coinbase has enjoyed a commanding position in ETF custody since the U.S. Securities and Exchange Commission approved spot Bitcoin ETFs earlier this year.

The company’s regulatory compliance and established infrastructure made it the preferred choice for many ETF issuers.

However, 21Shares’ move signals a growing appetite for custody diversification in the market.

Also Read: Coinbase Launches cbBTC, Bridging Bitcoin To Ethereum And Base Networks

Andres Valencia, Head of Investment Management at 21Shares said, “We consider our custody partners to be crucial to the risk management and operational excellence of our product lineup, and diversification adds to the safety and security of our offering.”

Anchorage Digital Bank, a federally chartered crypto bank, views this partnership as an opportunity to expand its footprint in the ETF market.

Nathan McCauley, Co-Founder and CEO of Anchorage Digital Bank, highlighted the company’s federal charter as a key differentiator, providing the regulatory certainty and security profile necessary for ETP custody.

This development aligns with a growing trend in the crypto industry towards multi-custodial approaches, aimed at enhancing security and reducing concentration risk.

BitGo, known for its cold storage solutions, will also serve as a custodian alongside Anchorage Digital and Coinbase.

The new custody arrangement applies to both the ARK 21Shares Bitcoin ETF (ARKB) and the recently launched 21Shares Core Ethereum ETF (CETH).

This move could potentially influence other ETF issuers to consider diversifying their custody arrangements, further disrupting Coinbase’s market dominance.

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