BlackRock Taps Anchorage Digital as Bitcoin, Ethereum ETF Custodian

BlackRock’s Digital Asset Trust Bank Partners with Anchorage Digital

BlackRock to use Anchorage Digital’s Custody Services for Bitcoin and Ethereum Funds

Digital asset trust bank Anchorage Digital will safeguard some of the Bitcoin and Ethereum held by BlackRock’s exchange-traded funds, according to two Securities and Exchange Commission filings submitted on Tuesday.

What is a Digital Asset Trust Bank?

A digital asset trust bank is like a regular bank, but it’s allowed to hold cryptocurrencies on behalf of clients, while Anchorage also specializes in staking, trading, and governance.

BlackRock’s Arrangement with Anchorage Digital

The world’s largest asset manager may use several custody accounts at the San Francisco-based bank to maintain funds for its $45 billion iShares Bitcoin Trust ETF, or IBIT, and $1.8 billion iShares Ethereum Trust ETF, or ETHA, BlackRock stated in the filings.

BlackRock had already tapped crypto exchange Coinbase as a custodian for its two crypto funds, alongside several other asset managers that launched new products for the industry’s two largest cryptocurrencies by market value last year.

Anchorage’s Role in the Digital Asset Space

Anchorage’s arrangement with BlackRock underscores the asset manager’s “ongoing risk management approach” and “expanding presence in the digital asset space,” BlackRock stated.

Competition in the Digital Asset Custody Market

So far, Coinbase has been dominant in securing billions of dollars’ worth of digital assets for the Wall Street products. Asset manager VanEck custodies its Bitcoin ETF with crypto exchange Gemini, while financial titan Fidelity self-custodies the BTC backing its Bitcoin fund.

Anchorage’s Expansion into the Digital Asset Space

Anchorage entered into a custody arrangement with crypto asset manager 21Shares in September, safeguarding funds for its spot Bitcoin and Ethereum ETFs. The digital asset trust bank also began supporting tokens on layer-1 network Aptos, including BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), in December.

BlackRock’s Custodial Arrangement with Coinbase Remains Intact

BlackRock’s custodial arrangement with Coinbase will not be affected by the firm’s new deal with Anchorage, which received its federal charter from the Office of the Comptroller of the Currency (OCC) in January 2021, the asset manager said.

BlackRock’s Flexibility in Choosing Custodians

BlackRock isn’t planning on moving funds to Anchorage from Coinbase, but it can decide how funds are split between the two firms at its “sole discretion,” the asset manager stated.

Conclusion

BlackRock’s partnership with Anchorage Digital marks a significant development in the digital asset custody market. As the world’s largest asset manager continues to expand its presence in the digital asset space, it’s clear that Anchorage Digital is poised to play a key role in safeguarding the digital assets of its clients.

FAQs

Q: What is a digital asset trust bank?

A: A digital asset trust bank is a bank that is licensed to hold cryptocurrencies on behalf of clients, in addition to providing staking, trading, and governance services.

Q: What is Anchorage Digital’s role in the digital asset space?

A: Anchorage Digital is a digital asset trust bank that specializes in staking, trading, and governance, and has partnered with BlackRock to safeguard its Bitcoin and Ethereum funds.

Q: What is the significance of BlackRock’s arrangement with Anchorage Digital?

A: BlackRock’s arrangement with Anchorage Digital underscores the asset manager’s “ongoing risk management approach” and “expanding presence in the digital asset space.”

Q: Will BlackRock’s custodial arrangement with Coinbase be affected by its new deal with Anchorage?

A: No, BlackRock’s custodial arrangement with Coinbase will not be affected by its new deal with Anchorage.

Q: Can BlackRock decide how funds are split between Anchorage and Coinbase?

A: Yes, BlackRock can decide how funds are split between Anchorage and Coinbase at its “sole discretion.”