VanEck has added Coinbase to its list of custodians for the HODL Bitcoin ETF to increase protection for the Trust’s Bitcoin holdings.
VanEck named Coinbase as an extra custodian for its HODL Bitcoin ETF on Friday, June 28, marking a significant change to its Bitcoin Trust. The agreement provides particulars and security measures meant to protect the Bitcoin holdings of the ETF issuer.
Additionally, this is a significant accomplishment for Coinbase, which was previously looking after eight Spot Bitcoin ETFs, including those from Bitwise, Grayscale, and BlackRock.
The VanEck Bitcoin Trust is mostly kept in cold storage by Coinbase, the recently appointed custodian. This technique improves security against possible online threats by ensuring that Bitcoin is stored offline.
Furthermore, this requirement for cold storage is only waived if Bitcoin needs to be temporarily relocated to enable withdrawals. According to the SEC filing, Coinbase will keep separate cold storage Bitcoin addresses for the benefit of VanEck’s Bitcoin.
These addresses will be kept apart from those used for Coinbase’s other clients and are verifiable through the Bitcoin network. Furthermore, this segregation aims to offer an extra degree of security and transparency.
Doing this will make verifying VanEck’s Bitcoin holdings on the blockchain possible immediately. Furthermore, the agreement highlights Coinbase’s need to document and clearly mark in its records that the Trust owns the Bitcoin it has.
Moreover, without specific authorization from the Trust, Coinbase cannot take out, lend, hypothecate, pledge, or encumber any of the Trust’s Bitcoin.
VanEck has assessed the rules, practices, and safeguards by Coinbase to ensure the security of the Trust’s Bitcoin. VanEck notes that it has no control over Coinbase’s operations or how these protocols are implemented, even though these safeguards comply with industry norms.
As a result, it cannot be guaranteed that the safeguards will be 100% effective in preventing theft, loss, or damage to the Trust’s assets. To protect consumer assets from particular occurrences like fraud or theft, Coinbase has made insurance arrangements.
Nevertheless, this insurance is shared by all Coinbase users and does not protect against any reduction in the value of Bitcoin. Before the January Bitcoin ETF launch, VanEck selected the Gemini exchange as its principal custodian.Â
Solana ETF Application
Earlier, on June 27, VanEck’s Solana ETF filing garnered media attention. In order to create a Solana Trust, the investment business filed a Form S-1 with the U.S. Securities and Exchange Commission.
This trust is supposed to support an exchange-traded fund (ETF) that tracks Solana’s spot price. The Solana ETF will trade on the Cboe BZX Exchange if the proposal is approved.
In addition, VanEck’s chief digital asset researcher, Matthew Sigel, expressed his excitement over introducing the first Solana ETF in the US. As Sigel noted, the function of SOL, the native token of Solana, is comparable to that of digital commodities such as Ethereum and Bitcoin.
Furthermore, he mentioned that “it is used to pay for computational services and transaction fees on the blockchain.” SOL can be exchanged in digital asset marketplaces and utilized in peer-to-peer transactions, just as ether is on the Ethereum network. Following that, 21Shares applied for a Spot Solana ETF on June 28.
