On Friday, June 28, VanEck announced a significant update to its Bitcoin Trust by naming Coinbase as an additional custodian for its HODL Bitcoin ETF. The agreement outlines specific terms and safeguards aimed at securing the ETF issuer’s Bitcoin holdings. Moreover, this marks a major feat for Coinbase that was already serving as custodian for eight Spot Bitcoin ETFs, including those by BlackRock, Bitwise, and Grayscale.
VanEck’s Terms For Handling Of HODL Bitcoin ETF Reserve
The newly added custodian, Coinbase, is tasked with holding the VanEck Bitcoin Trust primarily in cold storage. This method ensures the Bitcoin is stored offline, enhancing security against potential cyber threats. Moreover, the only exception to this cold storage requirement is when Bitcoin needs to be temporarily moved to facilitate withdrawals.
The SEC filing notes that Coinbase will maintain segregated cold storage Bitcoin addresses exclusively for the VanEck’s BTC. These addresses, which are verifiable via the Bitcoin blockchain, will be separate from those used for Coinbase’s other customers. In addition, this segregation aims to provide an additional layer of security and transparency. This ensures that VanEck’s Bitcoin holdings can be directly verified on the blockchain.
Additionally the agreement emphasizes Coinbase’s responsibility to record and identify in its books that the Bitcoin it holds belongs to the Trust. Furthermore, Coinbase is prohibited from withdrawing, loaning, hypothecating, pledging, or encumbering the Trust’s Bitcoin without explicit instruction from the Trust.
VanEck has evaluated Coinbase’s policies, procedures, and controls designed for the safekeeping of the Trust’s Bitcoin. While these measures are consistent with industry standards, VanEck acknowledges that it does not control Coinbase’s operations or implementation of these protocols. Consequently, there is no absolute assurance that the measures will be foolproof in protecting the Trust’s assets from theft, loss, or damage.
Coinbase has arranged for insurance to cover customer assets against specific events like fraud or theft. However, this insurance does not protect against any loss in Bitcoin value and is shared among all of Coinbase’s customers. Earlier, VanEck had chosen the Gemini exchange as its primary custodian during the January Bitcoin ETF launch.
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Solana ETF Application
Earlier, on June 27, VanEck made headlines with its Solana ETF application. The investment firm submitted a Form S-1 filing to the U.S. Securities and Exchange Commission, aiming to establish a Solana Trust. This trust is intended to support an exchange-traded fund (ETF) that tracks Solana’s spot price. If the proposal receives approval, the Solana ETF will be traded on the Cboe BZX Exchange.
Furthermore, Matthew Sigel, who leads digital asset research at VanEck, shared his enthusiasm regarding the launch of the first Solana ETF in the United States. Sigel pointed out that SOL, Solana’s native token, serves a role akin to that of digital commodities like Bitcoin and Ethereum.
In addition, he noted, “It is utilized to pay for transaction fees and computational services on the blockchain. Like ether on the Ethereum network, SOL can be traded on digital asset platforms or used in peer-to-peer transactions.” Subsequently, on June 28, 21Shares filed for a Spot Solana ETF.
Also Read: VanEck’s Spot Solana ETF Can Face SEC Rejection Due to One Huge Risk
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