Ark 21Shares Bitcoin ETF, a Delaware-incorporated exchange-traded fund, has entered into custodial service agreements with BitGo New York Trust Company, LLC and Anchorage Digital Bank N.A., as disclosed in a recent SEC filing. The agreements, effective as of September 11, 2024, will see both BitGo and Anchorage, in addition to existing custodian Coinbase (NASDAQ:COIN) Custody Trust Company, LLC, maintaining segregated custody accounts for the safekeeping of the ETF's bitcoin holdings.
Under the terms of the agreements, the ETF is obliged to indemnify the custodians against certain losses, while the custodians are required to maintain reasonable insurance coverage. The initial one-year term of the agreements will automatically renew unless terminated by either party.
The sponsor of the ETF, 21Shares US LLC, plans to begin utilizing the custodial services immediately, diversifying the custody of the ETF's bitcoin across the three institutions. The sponsor will allocate the ETF's bitcoin holdings among the custodians based on factors such as security assessments, insurance policies, and associated fees.
The existing custody arrangement with Coinbase remains unaffected, and the sponsor does not intend to disclose the specific allocation of bitcoin holdings among the custodians. The sponsor also retains the discretion to adjust the allocations at any time without notice to the ETF's shareholders.
Transfers of bitcoin between custodial accounts will occur on the Bitcoin network and are subject to the network's inherent risks, including irreversible transactions. The sponsor will bear any transfer fees, not the ETF or its shareholders.
This custodial expansion is part of the ETF's strategy to ensure the security and safety of its digital assets. The information for this report is based on statements from a press release.
InvestingPro Insights
As the Ark 21Shares Bitcoin ETF expands its custodial relationships to enhance security and safety for its digital assets, recent performance metrics from InvestingPro provide a snapshot of the fund's recent market movement. The ARKB has experienced a 1-week price total return of 2.84%, suggesting a recent uptick in performance. Despite a 1-month price decline of -2.37%, the year-to-date return stands at a robust 23.14%, indicating strong performance since the beginning of the year. With an average daily volume over the past three months of 1.74 million, liquidity appears healthy for investors interested in this ETF.
For investors monitoring ARKB, InvestingPro Tips highlight the importance of considering both short-term performance and longer-term trends when evaluating investment opportunities. The recent positive week-over-week return contrasts with the 3-month and 6-month returns, which have seen declines of -14.7% and -19.36% respectively. This volatility underscores the dynamic nature of cryptocurrency-focused investments. For those looking to delve deeper, InvestingPro offers additional insights and tips—currently featuring a total of 12 InvestingPro Tips—to help guide investment decisions for ARKB and other similar assets.
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